Anyone know how to use IB's MKT+REL order type?

Discussion in 'Order Execution' started by BobG, Mar 23, 2011.

  1. BobG


    I have a spread I'd like to trade at IB. It appears that, if a spread order isn't supported natively by an exchange, then IB's standard spread limit orders just sit and waits until they can buy at the ASK and sell at the BID while meeting the limit. This isn't what I want to do since I want to add liquidity.

    IB offers a different order type: REL+MKT. The description matches what I'd like to do which is: "one or both legs are submitted as REL, once the first leg trades the second is submitted as MKT".

    The help page for this order type is here:

    It says "When you select REL + MKT, the limit price field becomes inactive and the Trigger Price field requires the combo price input." I assume there's a good reason that this kind of order ticket isn't programmed so the limit price goes in a field called "limit" instead of "trigger price". Unfortunately, there are actually TWO "trigger price fields" that have to be filled in and no explanation of how they differ.

    I asked IB customer service and, as expected, haven't received any response to my ticket.

    I also created a very small trade and tested entering my limit price into both fields. It didn't seem to be doing what I wanted and I wasn't able to determine what TWS was doing from watching the order. Sometimes the order was active, sometimes is was held and monitored. It never seemed to change the displayed bid/ask of the underlying securities, even though my spread was inside the market.

    Maybe someone here knows whether this order type does what I want and how to use it?
  2. kostia00

    kostia00 Interactive Brokers

    lengthy explanation of how REL+MKT works:

    suppose you are trading a combo to buy ABC and sell XYZ. ABC is 9.00 bid, 9.02 ask. XYZ is 5.01 bid, 5.02 ask.

    the implied ABC-XYZ spread is 3.98 bid, 4.01 ask.

    suppose you place a combo REL+MKT order to buy this combo at 4.00.

    the first leg is being worked as REL order: this means IB will (simultaneously if possible) bid 9.00 for ABC, and offer XYZ at 5.02.

    if ABC is bought at 9.00, the system will sell the XYZ at the bid of 5.01 resulting in 3.99 combo execution price. if XYZ is sold at 5.02, the system will buy ABC at 9.02 ask, resulting in 4.00 combo execution price.

    suppose XYZ moves a cent down, bid becomes 5.00 and ask becomes 5.01. the system will continue to bid 9.00 for ABC (if ABC trades at 9.00 the system can sell XYZ for 5.00 and get the combo limit price of 4.00) but it would no longer offer to sell XYZ for 5.01, since sellng XYZ at 5.01 and buying ABC at ask of 9.02 results in combo price of 4.01 which violates user limit price).

    the "MKT" part of the order type says that once the first leg executes the system will chase the market if needed and get the second leg done regardless of the price: this means in rapidly changing market conditions you _may_ get a price worse than the limit price you specified.
  3. BobG


    I guess my question wasn't clear. I understand what the order type is supposed to do. (I agree with kostia00's explanation.)

    I don't understand how to ENTER it. There isn't a field on the order ticket for a single limit price. (Where the 4.00 would go in kostia00's example.) Instead there are two fields, both labeled "trigger price". Entering the limit price in both fields doesn't produce the behavior that is expected.