Once I've placed my order with a broker what happens next?

[watdahel]

From the tiny bit of info I gathered, my order is sent to computers run by the brokerage firm. The computers do all the trading; they find me the best price available. When I sell the same thing happens. My sell order is sent to the computers run by the brokerage firm and advertises it far and wide.

If this is the case wouldn't it be to my advantage to choose a broker that runs a larger network of computers? Wouldn't I be doing myself a disservice if I choose a small company like Zecco as opposed to Fidelity for instance?

Are these computers shared amongst brokerage firms? Is there one entity that runs and maintains the computers for all brokerage firms to use?

Also, I read a review of online brokers at SmartMoney.com. One of the criteria of their ratings penalized any company that sent huge amounts of orders to their own firms. Why is that? It seems contradictory to what I said above.

 

[Evadman]

They go to wall street computers that do the trading or out to the pits if you have some serious volume. It doesn't matter if it is a big brokerage or a little brokerage. The difference is the commission, and sometimes the speed of the trade.

 

[Idontcare]

Originally posted by: erwin1978
Also, I read a review of online brokers at SmartMoney.com. One of the criteria of their ratings penalized any company that sent huge amounts of orders to their own firms. Why is that? It seems contradictory to what I said above.

At least be smart about following the money for people who claim to be following the money "for your benefit".

What is in SmartMoney.com's best interest to tell you? Where does their cash flow originate?