[palakchokshi]

> The difference is often less than a penny. But it adds up for larger trades. Schwab, for instance, says that for orders of 500 to 1,999 shares of S&P 500 companies, the average savings from price improvement is $10.80.

Ok and Schwab charges $4.95 for trades. So an investor ends up saving $5 per trade. S&P 500 companies stock price ranges from $20 to $1200 so to buy 500 shares of a company with $20 price per share would mean you spend $10000 resulting in a saving of 0.05%. On the other end of the spectrum you spend $600,000 resulting in a savings of 0.0008% assuming that when they say "average savings" they mean "average savings" per trade and not per share.

Just to put the whole thing in perspective.

[justinsaccount]

> average savings from price improvement is $10.80.

I wonder if they lie about this like Fidelity does.

If the market on some product is 100.00/100.06 with a mid price of 100.03, and I route an order at the mid price that is filled at 100.02 that is then a price improvement of 1 cent.

On Fidelity I've noticed they calculate everything off the asking price, and would say my price improvement was .04, which is not really right.

[esoterica]

Fidelity isn't lying. The price improvement IS .04, not .01.

https://www.sec.gov/reportspubs/investor-publications/invest...

> The opportunity for "price improvement" – which is the opportunity, but not the guarantee, for an order to be executed at a better price than what is currently quoted publicly

It's measured with reference to the quote, not your order price. Think about it, if you sent a limit order for $20.02 and got filled at $10.02, did you get $10 of price improvement?

[justinsaccount]

> if you sent a limit order for $20.02 and got filled at $10.02, did you get $10 of price improvement?

Yes. That's a rather extreme example, but If I route a limit order for X and get filled for Y, my price improvement is X-Y, not the asking price - X. I guess it depends on if you consider the price of something to be the mid price or the bid/ask price.

As far as I am concerned Fidelity IS lying. The market on the thing could be 100.00/100.10, with a LAST trade price of 100.05. I route a limit order for 100.05 and get filled at 100.05 and fidelity claims I got price improved by 5 cents, which is bullshit.

edit: also, that page you linked and quoted is specifically talking about market orders:

> Here's an example of how price improvement can work: Let's say you enter a market order to sell 500 shares of a stock...