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Perhaps this will add come clarity to the four decimal places trading "scam."In comparing the conventional two decimal places trading versus the controversial four decimal places trading, consider this:
Value of 10,000 Shares of the G Fund with Pricing at 4 and 2 Decimal Places
The table assumes trading 10,000 shares, look at "Day 5" under the 4-decimal column, the value of the account is $120,083 versus "only" $120,000 in the 2-decimal column.
Now, $83 is minuscule in the scheme of things, but if you increase the number of shares traded from 10,000 to 1,000,000, the results are considerably different, $12,008,300 versus $12,000,000. Trade 10 million shares and the difference is $83,000.
Go back to the feeding frenzy last August when nearly 400 million shares were traded for the period Aug 6 - Aug 27.
Assuming those shares were traded to 4-decimals, and for this example, assume that .0083 was the average decimal for those 400 million shares, and let's assume that Nite traded 10% of the 400 million, Nite made an additional $332,000 (40,000,000 x $0.0083) versus zero if the shares were traded at 2-decimals.
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Msg # | Subject | Author | Recs | Date Posted |
47250 | Re: ,,, four decimal places trading... additional information Q & A | Area51 | 1 | 3/2/2010 1:16:44 PM |