Wait a minute. You entered an order that WAS inside the market, right? And you got filled. What else would you expect? I think you should send the MM some flowers.
I guess you still miss my point. I think I missed yours. If this is truly part of your strategy, then you would have accounted for this behavior when you tested it, and it wouldn't be such a surprise. Part of that behavior would be the questionable act by the market maker in a ridiculously thin market. Figure in your costs of posting here, your frustration, your need to feel protected by the rules. You absolutely got what you deserved and you were lucky it wasn't worse in terms of overall costs to you (time, money and frustration). Oh, and by the way, if you post here, you need to expect that people will tell you what they think you should do, especially if you sound like you are asking for advice. I am certainly not going to let a stupid move go unnoticed. I think you needed a lesson and you got it. I AM telling you what not to trade, because if you can't handle what you are trading, you have no good business trading it, unless of course you like to feel frustrated and angry.
Man, I am paper trading a strategy that trades some very thin stocks, OTCBB. This is scary actually, getting filled so far away from prev. close. Especially since I found a bug that changes the limit order price by a factor of 1000 times what I want if the price is under 10 cents [tradestation 2000 and Dyanorder via IB, probably the bug is in Dynaorder]. Getting filled on a thing like that could ruin your whole day. I wonder if I could get a trade like that busted, I never knew such outlandish stuff could go on. The story makes me think of a guy going to a business and offering an extortion deal saying "I'm connected to so and so" and the people there tell him "we tax so and so". Let's face it, a deal is a deal, they let you off easy, you should thank them. Thanks for sharing though because that is an aspect of trading I never thought about much and I need to.
My take on this is that the OP (wanted to) entered the limit sell order and be the ask price for the stock. (current was 155 and he entered 150). Some poor soul will then enter a market order and get nailed.
That's what I read. I have thought of trying to do that on some thin issues to see what happens but never bothered. Repeat after me: check your order before sending it, check your order before sending it.........
What happens to people that do this is they lose money. If I post an offer 10% above the market, and get filled, it will get busted almost all of the time. When it doesn't get busted, it'll be because someone made a +20% takeover offer. In the very rare instance I get taken by mistake and it doesn't get busted, I won't make enough to cover the losses from the takeover situation. The further in you go, you get varying risk/reward characteristics which start to include analyst upgrades, earnings pre-announcements, etc. Now, 500% above the market, you probably don't have any takeover risk, so you're just trying to catch the rare instance of someone making a mistake, and being able to keep it. While this seems to be free money, in the end, it seems unethical, and way too much work for almost no return.
seems to me he was playing the arca pre-market auction and got caught on the wrong side....happens all the time..typically arca busts trades like these without much issue -strange he had such a problem
Reminded me of one of my favorite quotes.... "No one dies a virgin, life screws us all before we die"