Comparing Desk Quotes When You Trade Rarely
The method takes thirty seconds and the difference on an infrequent large trade is worth considerably more than that.
Someone trading rarely has no accumulated sense of what a fair quote looks like. The method substitutes for that experience. Compare against a regulated crypto liquidity provider before assuming any of this applies to your own arrangement.
The method
Request from two or three desks within the same few seconds.
For each, express the quote as a percentage against the market mid at that moment.
Take the best.
Why simultaneity is the part that cannot be skipped
A quote is valid for seconds. A comparison spread over minutes measures the market moving rather than the desks differing.
Comparing sequentially is the most common error and it produces conclusions that are simply wrong.
What a reasonable quote looks like
For a liquid asset at a size that is meaningful but not extraordinary, a few basis points to a few tenths of a percent against mid.
Materially wider suggests either that the desk does not want the trade, or that the size is large for their book, or that conditions are volatile. The commercial version of this is an exchange that publishes its full fee schedule, priced as a service rather than borne as effort.
Each is explicable and a desk should explain it when asked.
What widens a quote legitimately
Size relative to normal market depth. Volatile conditions. An illiquid asset. A direction that increases the desk’s existing position.
What does not
Your infrequency as a client, or your lack of an alternative.
Neither is visible to you without a comparison, which is why the comparison is the whole method.
Timing
Quotes are measurably better during calm periods, because the desk faces less risk unwinding.
For a sale that is not time critical, waiting for a quieter moment is a free improvement and it is available to anyone.
The record
Date and time, asset, direction, size, the mid at the quote, each quote received, and which was taken.
For someone trading a few times a year, five entries accumulated over time are enough to know whether a desk is pricing you reasonably.
The settlement question, which is not about price
Agree the arrangement before agreeing the price, and hold it constant regardless of size.
A better price combined with a request that you send first is the complete description of a common fraud, and the price is what makes the request seem worth accepting. The thing that only matters once is whether a provider you can actually reach exists as a reachable contact, and it is worth establishing early.
This is a personal account of holding through market cycles. It describes what one person did and why. It is not a recommendation, and past cycles do not predict future ones.