Ep 60: Replay: Order Routing, Market Makers, PFOF and Dark Pools Explained

Since we recently learned about Stock Lending, Short Selling, P/E Ratio, and Stock Valuation in the last 2 episodes, we figured it's a good time to revisit our episode on Dark Pools, PFOF, Order Routing, and Market Makers (not to be confused with Market MakeHERS 😉). This also happens to be a Halloween episode from last year, so enjoy our costumes if you're watching the video podcast.

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🔮 Replay of Episode 16

In this episode, Jess Inskip & Jessie DeNuit delve into the complexities of the stock market, focusing on key concepts such as market makers, the bid-ask spread, and dark pools. They explain how orders are processed, the role of market makers in ensuring price equality, and the implications of payment for order flow. The discussion also highlights the importance of understanding these mechanisms to navigate the market effectively and avoid potential pitfalls.

✨Takeaways

• Understanding the National Bid and Best Offer (NBBO) is crucial for investors.
• Market makers play a vital role in maintaining market liquidity and price equality.
• The spread between bid and ask prices is where market makers earn their profit.
• Payment for order flow is a common practice among brokerage firms.
• Dark pools are designed to prevent market manipulation by concealing large orders.
• Investors should be aware of the complexities of order execution and market mechanics.
• Regulations exist to ensure transparency in trading practices.
• Retail trading refers to individual investors participating in the market.
• The stock market is highly regulated, often more so than other industries.
• Financial literacy is essential for navigating the stock market effectively.