 In this video, I'll show you how to lower your feet, choose the proper route, and also when to choose that route to have the maximum edge in the market. So as usual, all the best tools will be linked in the description. Don't forget, check that out. Let's get right in. The first thing we're gonna do is break down the difference between the tiered commission and the fixed. This is pretty important if you're gonna be active, but if you're just an investor or like a swing trader, this might not be as useful to you, but if you're active, I think the tiered version is just gonna be better. There's a few reasons why. Is the minimum order between the two. If you're trading something that's expensive, like a Tesla or a MicroStrategy, which are sometimes like $500 or $1,000 or now an NVIDIA, what's gonna happen is you don't often take $500 or $1,000 share at a time. You often take a couple hundred shares. So if you're using the fixed, you're always gonna be paying the top dollar for your trade, which is gonna be a dollar minimum. The maximum is always gonna be the same thing, which is pretty standard all across the board. So first of all, this is why I prefer the tiered factor, but there's gonna be a caveat to it and something that's really important to understand and it's how to maximize this strategy by using this tiered way. So first of all, depending on your volume, I trade small caps, so I cross the $300,000 share per month pretty often because when things are really cheap under a dollar or under $2 or even $5, this number goes out very quickly. So I'm often in that range. So already there, I'm gonna pay a cheaper amount than if I'm paying the fixed amount. So over here, what we have is some level two and there's two different situations. So this is gonna be situation A, which is gonna be a tick book. So something that has a lot of exchanges, you can see bats, NASDAQ, NASDAQ, edgex, memex, ARCA, and then the same thing on the offer. We have a lot of liquidity and the spread is only one penny. Over here, we have a different situation. You have NASDAQ, over here, you have edgex, pardon, and then you have NASDAQ and then you have ARCA all the way down here, and then you have ARCA all the way here and then you have edgex here and then NASDAQ here. So you can see that the market maker or the exchange that you're trying to get, if your example deciding to choose ARCA as a route, is gonna be pretty bad because you can go buy the offer at 277, then if you try to sell on ARCA, you're gonna get 259, which is a big loss for absolutely nothing because there was a better price. You could have got it at 264. In a scenario like this, if you're using ARCA because there's so much liquidity on the book, you're getting ARCA here, you're getting ARCA there, so the route that you choose in this situation is not gonna really matter and this is gonna be important because it's gonna change the commission structure or the way you execute trade when I break down the structure right after. So in this scenario here, what I like to do is really use the smart route. What it's gonna do is if I go to pay for the offer, it's gonna get me something on EdgeX because it's gonna reroute to the best price as possible and then if I wanna sell, it's gonna sell me here at 264 on this and I don't have to choose EdgeX or NASDAQ or ARCA, it's gonna get me either in between the spread, so between 264 or 276 in the between, it's called the mid market or it's gonna get me the worst price which is gonna be that 264 or if I'm buying the 276 that's right here, I'm not gonna be paying ARCA at 277 or ARCA here at 259 to sell. Same thing here, if I go to smart route, what I'm gonna do is I'm gonna pay either 218 or 217 and sometime you get prints in the mid which is gonna be in between these price. This is when you have these long prints on your execution because it's hitting the mid because there's liquidity between on the dark pool. In scenario A, I don't really care which route I'm using because there's just so much liquidity and this is often gonna happen when the market is open. Scenario B, what we have is a dangerous level two to trade on just one exchange because you can really take a big loss just by not looking at the level two. So for me, when I'm trading in the pre and the post market, it's really important that I use the smart route. Otherwise, I get really screwed if I don't pay attention. So what I do in the pre market is always put my route on the smart route and then when the market is open, I generally leave it there within my hotkeys or sometime I'll change it depending on if I'm adding liquidity and this is what we're gonna be breaking down next. Sorry for the interruption but if you're getting value from this video and you're learning about how to improve your fee, don't forget to like, subscribe. I also did link all the best tools to day trade in description. Let's get back to the video. So now that you see the two level two that we had, the example, it's gonna make a lot more sense. So if I'm paying always the fixed structure which is over here on this category, the fix. It's gonna be here, the fix. What I'm paying is always 0.005 and there's not really fees. So every 100 share, you're gonna pay 50 cent, every 50,000 share, what you're gonna do is $250 and this doesn't matter which route you use. You can use the smart route, you can use ARCA, you can use edgex. You're just gonna always pay that which is somewhat expensive because you can actually pay less in doing it a bit differently. So what I do over here is I have a structure for take and a structure for add. Taking liquidity means you're using a market order, you're buying on the offer, you're selling on the bid, you're shorting the bid or you're covering on the offer. If you're crossing the spread, that means it's gonna be taking liquidity. Market order are always gonna be taking liquidity because I got that question. So when you're taking a market order, what is gonna happen is you're gonna pay full price. When you use the tiered structure, tiered structure right over here and then you use the smart route, you're always gonna pay this cost of like 0.005, it's sometime going to be less. But for the most part, you're never gonna pay more than this to buy a stock or to sell a stock. I haven't seen it, this is really what you're gonna be getting, this or lower. When you pay on ARCA or NASDAQ or EDGEX, it's going to be different. You're gonna pay commission, which is the commission that you're gonna see over here in this example, but you're also gonna pay exchange fee to use that route. So to know how much are the exchange fee, this is where it is, you click on the exchange and then you have, if you're looking at NASDAQ, greater than equal to a dollar, removal equity, this is what you're gonna get charged. To add liquidity, you're gonna get a rebate. When you add liquidity to a book, what it's gonna do, it's good because it makes the book deeper, thicker. So that means they're gonna pay you for posting an offer. So that means when you post an order. So in the tiered structure right over here, you have ARCA. And then ARCA, your commission, this is from IBKR, it's gonna be 0.035 and then you're gonna have also the fee for the ECN to use ARCA. So your total is gonna be 0.065 or for every 50,325 dollars. Then NASDAQ is gonna be the same price, EDGEX is going to be the same price. The only preference I have most of the time in the pre-market or the post-market is going to be ARCA because there's always or almost always liquidity when I'm trying to post something, I get filled a bit better. In this scenario over here, we can see that this cost over here is more expensive than the fixed structure. So if you're someone that's always gonna be buying on the ask, selling on the bid or shorting the bid and covering the ask or using market order, you can see here that for you the fixed structure is just better because you're gonna pay less. This could be different if in a scenario that you're using a commission structure of 0.02, then you're gonna be paying the exact same thing over here. So then you would be better to go in that structure to at least get a rebate. But if you're someone that's gonna be sometime adding liquidity, that means you send an order out, you wait a bit, then it gets picked up. This is where the tier structure really start to work better. This is tiered when you take liquidity, that means you cross the spread. This is gonna be when you add liquidity. So as we said over here, NASDAQ, for example, on the ARCA exchange, any NASDAQ stock, if you add liquidity, you're gonna get a rebate. So when you look at this, you say, hey, my commission 0.035, if I add a liquidity, I'm only gonna pay a total of 0.0015 for my total cost of this transaction. And if you're trading 12,500 shares, it's only $1875 versus $325. So really, really big difference. So for me, the way I save on commission and lower my fee is very simple. When I'm paying the offer, so I'm buying on the ask, I'm gonna use smart, when I'm selling on the bid, I'm gonna use smart because I'm taking liquidity. So I don't wanna pay more than I should. And this is gonna be the max that I'm gonna pay for that transaction. So it's gonna be 0.05, or something like 250 for every 50,000 shares. Every time I take, it's gonna be the 0.005, even if I'm using the fix just because I'm using the smart route. And this is going to help me because in a scenario like this, because I do trade a lot pre-market and post-market, I'm not gonna take a big loss over here because if I'm using ARCA, I'm gonna pay $277 to get in, then I wanna get out $259. I'm just losing a ton of money just by trying to use ARCA, which is gonna be a bad decision for me. When I'm using smart, I'm gonna get this price at top. I'm also gonna get this price over here. So technically on the trade, even if I'm paying maybe a bit more in commission or the same, I'm improving my price. So if you're using 50,000 share per example, and you're getting a better price, this is a lot of money saved. And the different scenario or how I fully execute transaction is when I'm taking, as I said, I'm gonna use the smart route. But when I'm adding or I'm exiting a trade because sometimes a trade is working well, you have time you send order at a specific price, what I'm gonna do over here is I'm gonna send order out on ARCA, NASDAQ or EJX at the price that I wanna get executed because it's going to be cheaper than just taking it look really and I'm not in a rush to get out of the trade. So this is gonna be the max that I pay for a trade and this is going to be what I pay to exit a trade when a trade is working. So as a total as a whole, I'm gonna pay less in fees than if I'm just using a fixed structure or over here I'm just taking an liquidity on ARCA, NASDAQ or EJX all the time. So in this example, 50,000 shares, 50,000 shares over here, day volume commission, 250 bucks. I'm trading 50,000 share in the tiered structure, ARCA 0.35 for the commission, then fees 0.03, total commission 3.25. So the better option for me is to take 50,000 share on SMART and as soon as I can maybe execute a quarter of this transaction on something like ARCA over here or EJX because it's gonna save me some money. So this is just how I do it and also why I use SMART route and sometime I'll have ARCA and NASDAQ and EJX in my execution just a way to improve my price, my total fees and to maximize my edge in the market by getting as fast as possible in the stock without having to pay a bad price to get in. So I hope you guys enjoyed this video. If you do like and subscribe, peace.