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Order routing

The decision about where an order is sent after you press the button: which exchange, dark pool or market maker actually receives it.

Your broker rarely sends orders to "the market" because there is no such single place. US equities alone trade on more than a dozen exchanges and dozens of alternative-trading-systems, and the routing choice affects your price, your speed and the broker's revenue.

Routing decisions are disclosed. Brokers publish where they send orders and what they are paid in rule-606-report filings, and many platforms let you choose a destination manually.

Example: a 500-share order can go to an exchange for a 0.3 cent rebate, to a wholesaler paying the broker 0.1 cent in payment-for-order-flow with 0.2 cents of price-improvement for you, or to a dark pool at the midpoint. Three destinations, three different outcomes for the same ticket.

Related: smart-order-router, internalisation

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