Price improvement: Helping save you money on trades

Ever hear the term "price improvement" used when placing a trade for a stock or option? Wondering what it is, and more importantly, how it benefits you? Price improvement is the amount of savings that you may receive on a stock or option trade compared to the quoted price at the time the order is submitted. Fidelity has performed better than industry averages and has saved many customers money in price improved trades.

Once an order is accepted and routed to a market center, Fidelity captures the National Best Bid and Offer quote (NBBO). The NBBO is a consolidated quote representing the highest bid price of any buyer and lowest offer price of any seller for a given security across all visible quotes.

Fidelity, as the broker, will work to obtain the best available price because it can route the order to up to 50 market centers including exchanges, market makers and automated trading systems (ATS). These market centers compete for customer order flow by improving the price. That's "price improvement."

Let's take a closer look at this with our hypothetical investor, Robert…

Robert is about to make a trade. He's purchasing 200 shares of the stock XYZ. The current NBBO is $49.98 x $50.00 and the trade is placed at 3:00 pm

In this example, through price improvement, Fidelity saved Robert money. While the original best offer price was $50.00 per share, the execution price wound up being $49.99 per share. Since the trade was price improved by $0.01 on Robert's 200 share order, the total savings on this execution was $2.00. Fidelity displays this information right on the Orders page.

In addition, your quoted price, plus any savings we were able to get, are shown after you clicked trade. We even provide a pricing summary that shows how much you've saved on a monthly, yearly, or year-to-date basis.

It's important to remember that price improvement is an opportunity, not a guarantee. Still, by taking advantage of price improvement, a broker may help reduce Robert's total cost.

  • Since Robert is BUYING shares of XYZ, price improvement would result in the order receiving a trade execution price LOWER than the best offer price.
  • If he were SELLING shares of XYZ, price improvement would result in a trade execution price HIGHER than the best bid price.

Calculate how much Fidelity's Price Improvement can help you save through this quick tool

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Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

Based on data from IHS Markit for SEC Rule 605 eligible orders executed at Fidelity between October 1, 2022 and September 30, 2023. The comparison is based on an analysis of price statistics that include all SEC Rule 605 eligible market and marketable limit orders of 100-499 shares for the 100 share figure and 100–1,999 shares for the 1,000 share figure. For both the Fidelity and Industry savings per order figures used in the example, the figures are calculated by taking the average savings per share for the eligible trades within the respective order size range and multiplying each by either 100 or 1000, for consistency purposes. Fidelity's average retail order size for SEC Rule 605 eligible orders (100 -1,999 shares) and (100–9,999 shares) during this time period was 442 and 771 shares, respectively. The average retail order size for the Industry for the same shares ranges and time period was 257 and 414 shares, respectively. Price improvement examples are based on averages and any price improvement amounts related to your trades will depend on the particulars of your specific trade.