romacopia

romacopia t1_iuik49w wrote

I realize this is an old conversation and I should probably just leave it, but I want to set it straight.

When an institution internalizes your order, it is functionally identical to them inversing your position as far as their books are concerned. It is true that they don't bring your order to market, but they also don't bring their own inversion. They also do this at your discretion, not theirs. They gain the option to bring your order to market at their discretion which, again, is functionally identical to closing out the inverse of your position. You also have the right to send an order to close your position at your discretion which the institution also internalizes, effectively closing their inverse position on their books - but not the open market.

If they brought these exact trades to market together instead, it would only increase volatility, not move the market directionally. All they really gain by doing this is eliminating the risk of slippage when making large trades, plus whatever fees and commissions they collect. They still realize the P/L of the spread between when you open your position and either when they close their internal inverse position or when you close your position. When they choose to bring your order to market, yes, the market moves, but they also must still realize a loss if they are in the red. If they bring your order to market to (effectively) close their internal position while yours is still open with them, the market moves against you AND them, because they're now in an identical position to you in the open market until you close out and they bring your closing order to market.

Internalization doesn't give them the ability to manipulate the market in their favor. What they gain is the elimination of slippage. You can also benefit from this through reduced volatility on the open market. You can trade with narrower stops and profit targets.

Also, I don't care about the internet bandwagon. I personally think the dialogue around GME is eerily similar to online conspiracy groups and it creeps me tf out. Also I think the whole thing is a giant FOMO and the squeeze squoze a long time ago. You do you, though.

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romacopia t1_iuctnam wrote

The market is a convoluted mess but it is rooted in something very simple - money makes the price move. You HAVE to lose money if you want a price to stay above a certain level and any kind of pressure exists trying to pull it below that level. Even if the loss is entirely in opportunity cost, you must lose. There is no winning strategy that involves propping up a price like weekend at bernie's. Ask the GME cult's ex wives.

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romacopia t1_iub6og4 wrote

The "rigged market" claim is the dumbest shit on the planet and I see it every day I'm on here. It would fucking vaporize an inconceivable amount of money to artificially maintain an unfair price level on a company of that scale. They'd have to dump hundreds of billions into something that they know is overpriced. Who the fuck is doing this? Why? The MUCH simpler explanation is that you can't handle taking an L.

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