I believe that it is the software(not ARCA) that accepts stop orders. The program in the direct access software accepts a "stop" order and sends a market order to sell(assume you are long) when the stop price is reached . The order is now sent from the direct access software to ARCA. Since INCA & REDI also accept market orders(that "peg" the order to NASDAQ level II Bid or Ask), these two ECN's could be used for stop orders if this feature is programmed into the software. ECN's REDI, ARCA & INCA will accept market & limit orders. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
Gene already answered this question correctly, but neglected to mention why we rarely (extremely rarely) use stop orders to begin with. In the case of the NAZ, your broker is essentially "looking at your hand" - which can be costly of course. Even on listed stocks, your stop can be set off during a "trade through" - when you don't want it to be set off, which is again, very costly. You may need to find a small window on your screen at work for alerts of stock prices...
Don, I would agree with you. However, if there are traders who are daytrading five plus positions(or are at lunch) , a stop order can lower the price of lunch from $1,500 to $250(assume stops go off at a resonable price). I would agree with you that a "mental" stop is the way to go. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
My brother and I just can't get over the fact that you "east coast types" actually leave the trading floor to go to lunch...I guess that is why I "load up" so much on junk food in the office... Stops can be used if you're actually "out of touch" for a while....
For what it's worth- it's my understanding that when you place a stop with IB, nobody sees it. (Equities anyway; I don't trade futures or place stops on options positions, but I'd assume it is the same). As IB does prop trading, it would be a conflict of interest for them to see customers' stop orders, thus it is kept on a computer away from humans, or so IB has told me whenever I've bitched about a fill. Like I said, these stops are kept on IB's computers and are not sent to any MM or exchange until the stop price is triggered and the order is activated. The benefit of this is that if your machine goes down, the stop is on IB's hardware and will stay alive, keeping you protected. Be aware that there are different rules for how stop are triggered with different exchanges, i.e. nasdaq vs NYSE. You should check with your broker. Tip - If you have a stop placed with IB and use TWS, if you change that stop don't forget to click "Transmit" again, otherwise the stop will remain unchanged, even though the new stop price is displayed in TWS under "Pending," making you think that your stop has been changed, when in reality it hasn't.
Don, Man does not live by Bread alone! We do take lunch once in a while on the East Coast , or at least strech our leggs for 20 minutes. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
I do prefer a mental stop. On days where I can sit at my desk all day this is what I do. But placing a stop when I have meetings or am needed on the floor (engineering company) makes me feel a little safer. I recognize I'm kind of trying to trade like a full-timer on a part-time basis but right now that's my only option. Thanks for the info. from you all.