Are stop orders always sent on to the broker's choice of MM of that stock or to the route you may choose? What I'm getting at is if I want to setup a stop order because I currently trade at work and (amazingly enough) they expect me to actually do some work while I'm there, am I basically "telling" the MM how far he can walk down to get my shares? Or is this order held by most brokerages "in-house" until the price is met? If I switch to direct will most software hold my stops internally, therefore not tipping my hand to any MMs? I don't daytrade but swing trade and can't watch the moves every minute so using a stop is important to me sometimes. Related question: Can direct software allow me to place both limits AND stops simultaneously on a single position, thereby essentially becoming automated based on my preset risk/profit definitions? I realize blackboxes exist but I'm not looking for anything that elaborate (obviously). Excuse my ignorance. I'm here to learn.
Tough to make sense of exactly what you're asking here, but I'll take a shot at it. Are stop orders always sent on to the broker's choice of MM of that stock or to the route you may choose? I assume you mean a broker like Schwab, BrownCo, etc., and if so, they either make a market in the particular stock you're interested in, or they sell their order flow to a few retail MM's like NITE and HRZG. With normal "brokers" you don't have a choice of route. What I'm getting at is if I want to setup a stop order....am I basically "telling" the MM how far he can walk down to get my shares? If the inside market triggers your stop it becomes a market order, and then you have no control over what price you are filled. Normally the broker's MM will take the other side of your trade, making the spread. If I switch to direct will most software hold my stops internally, therefore not tipping my hand to any MMs? Most direct access software either holds your stops on your computer or their server (for Nasdaq), in either case not sending the order until triggered. If it's held on your computer, and you are disconnected for any reason, your stops are lost. Can direct software allow me to place both limits AND stops simultaneously on a single position If you mean a combination stop-limit order, most will. If you mean a separate sell-stop and sell-limit order on the same stock, some will, some won't.
----------------------- I assume you mean a broker like Schwab, BrownCo, etc., and if so, they either make a market in the particular stock you're interested in, or they sell their order flow to a few retail MM's like NITE and HRZG. With normal "brokers" you don't have a choice of route. ---------------------- My broker routes to NITE mostly. What I meant was is it likely as soon as I input a stop order does NITE now know what my stop out is? ----------------------- If the inside market triggers your stop it becomes a market order, and then you have no control over what price you are filled. Normally the broker's MM will take the other side of your trade, making the spread. ---------------------------- Thanks but I understand what a stop and stop limit is. I wondered if when I place it basically who will know what I committed to. --------------------------- Most direct access software either holds your stops on your computer or their server (for Nasdaq), in either case not sending the order until triggered. If it's held on your computer, and you are disconnected for any reason, your stops are lost. --------------------------- Great! Thanks for the info. --------------------------- Can direct software allow me to place both limits AND stops simultaneously on a single position If you mean a combination stop-limit order, most will. If you mean a separate sell-stop and sell-limit order on the same stock, some will, some won't. -------------------------- Yes I meant covering both ends of my positions no matter which way the market moves. My "newbie" broker doesn't allow me to do this and I'm making a shopping list of what I want to be able to do so I choose the right new broker. Thanks for your reply. I had a lot of trouble typing what I meant there
If your broker routes to a MM then they know your intentions as soon as you enter a stop and they will make a buck out of you if they can.When watching live charts I often see the stock spike in the opposite direction of the main move.IMO this is the MM's searching for stops to take out.In your case they dont have to search,they know exactly where you are. For what you want to do you need to be using an electronic system like ARCA.
That's what I thought. I got shook out of a position recently and it occured to me that my practice of placing stops durinf the day so I can more safely stop watching intraday might be helping the MM know where he can get my shares (and anyone elses). I'd rather risk disconnection on my end losing my stops on my local computer than giving away my stop position. I can't remember the last time I lost a connection at my end. Thanks for the replies.
Just a note. Stop Orders are accepted by the NYSE and AMEX. Generally NASDAQ does not accept Stop Orders. If you trade NASDAQ and your software accepts stop orders, the software generates a market order,once the stop price is reached. Unless Charles Schwab has a relationship with a NASDAQ market maker like MASH or NITE, NASDAQ MM's do not accept stop orders. One of the problems of a NASDAQ stop order is that if it is generated by the software(assume you are long), the software will generate a mkt order to sell that will "pegg" the order to the best bid on NASDAQ level II. If the stock is "crashing", this may not be the best thing to do since none of the NASDAQ MM's are obligated to purchase the stock. I use a "mental stop" when trading NASDAQ. NYSE & AMEX specialists accept stop orders and they are obligated to execute the stop order at a fair price. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
Thanks Gene. What do you suggest for my situation on Nasdaq stocks if anything? I need the safety of being able to walk away from the screen without adding risk to my money management plan. Perhaps on Nasdaq that won't be possible? At least I'll know.
While stop orders are accepted on the NYSE and the AMEX, you may not want to "place" them there, because then the specialists know exactly how far they need to move the stock to hit stops. One solution when dealing with them, which is the exact same solution for Nasdaq stocks, is to use software that allows "conditional" orders, as these sit on your computer and nothing is sent to the market until it's triggered. Most EDAT brokers have this capability built into their software. As to sending both targets and stops (i.e., two orders on the same stock, with prices above and below your fill price), again, some allow it, some don't. CyberTrader allows it with a self-cancelling capability (when one is hit, the other is cancelled). Realtick allows it but you must cancel the second condition if the first condition is fulfilled. I haven't used it, but I understand IB also allows it with what they call an OCA order (One Cancels All).