Did I get screwed by IB today ?

By definition, a stop is triggered when a trade (aka last) occurs at (or above/below) your stop price. Bid and ask price is meaningless in this context.

The fact TWS "defaults" to an IB supplanted trigger method dependant on instrument, while allowing the user to override the default, puts the onus on the user. This also suggests stops reside locally, relying on a properly connected and functioning TWS to be triggered.

Although I'm not an IB client past or present, specifying a stop trigger method seems like a nifty feature. Not a fan of locally held stops however.

Osorico

 

Non-native (exchange held) stops are held on IB's server, not in the TWS client on the customer's machine.

If you are using IB's API you can code up anything you wish and hold it locally with all the uncertainty of a connection loss and subsequent failure to trigger, etc. You can also use the IB server held stops.

Jack

 

Thanks for your replies. Here are my answers to some of the replies (the rest following soon…) :

pdwst33 - thx for the info. I definitely agree with you and I think you would lose a lot of money if you didn't cancel your order and resend like you said. I had my orders do that a few times in the past and that's what I would do (cancel & resend). I should have done that today instead of watching the stock go down along with my P/L... I will also change the default stop trigger method to LAST.

jsmith - Yes, I meant 17.93$. Thanks for pointing that out. I don’t always trade the same stocks so it’s hard for me to know if the slippage was normal for IMMR. The only thing I know is I rarely get filled so far away from my entry and this happened on my 2 trades today. That’s why I’m thinking IB was having tech problems or something.

Osorico – I agree with your definition and I always thought that’s how a stop should work. Unfortunately, IB does not agree with you & I when it comes to NASDAQ stocks. That was their answer when I asked why it was like that : “: Nasdaq stocks can have Wild or trades that may trigger your stop necessarily this is a saftey guard”. Like that makes any sense… Yes, the spelling mistakes are part of their answer

JackR – thx for the info.

 

You should have read how IB handles its Nasdaq stops before you tried out the stop orders. You have the option of specifying stop triggers based on bid/asks or last prices. I guess now you know and since you seem to want last price triggers, you should change your orders to use that method. Just so you know, IB put in the double bid/ask stop trigger method for Nasdaq stocks to eliminate the possibility of being stopped out by bad last prices. So if you do use the last price method, you might have stops that trigger for no apparent reason.

 

stock777 - I always use mechanical stops and always get out of my trade with an average of 0.01$-0.03$ from stop-loss price. This is true for me for stocks of 20$ to 60$. I like to send my stop-loss with my entry order. That way, once my position is filled, my stop is automatically sent with it. I will later cancel my original stop and move it up (trail) from time to time.

IMMR is a tech stock, here's the description from Yahoo : Immersion Corporation engages in the development, manufacture, licensing, and support of hardware and software technologies, and products that enhance digital devices with touch interaction.

 

sprstpd - I agree with you but I didn't know any better. I never even considered there could be a different way of handling stops. Lesson learned that's for sure.

"Just so you know, IB put in the double bid/ask stop trigger method for Nasdaq stocks to eliminate the possibility of being stopped out by bad last prices. So if you do use the last price method, you might have stops that trigger for no apparent reason."

Good point. So any bad tick could trigger my stop ? What method do you use/recommend ?

 

Evidently you have just gotten around to reading about stops at IB, AFTER you entered your stop order and were evidently "disappointed" in the fill that you got.

You can select a variety of trigger methods, all of which have advantages and disadvantages. All you had to do was pick the one you desired.

But did IB "screw" you? Not at all. It sounds like the stop triggering method that you used worked as it should have. Next time you might want to read through the users guide first, and then actually select the features that you want in terms of your orders. TWS is a fairly sophisticated system, gives you all kinds of different possibilities depending on YOU. But in order for you to benefit, you have to understand the system. You can do that by studying the users guide.

OldTrader

 

Actually, I don't believe "any" bad tick could trigger a stop where the triggering method was the last price. As I understand it, it the price must either be within the bid/ask, or specified percentages outside the bid/ask. IB specifies .5%. So if your stop is 18, your stop could theoretically be as low as .5% of 18 (if the bid was 18), which would be 17.91. You can read a complete description of this in the users guide.

OldTrader

 

I have always used the double bid/ask but placed my stops a little tighter than I normally would with last prices. I.e., you know you are going to get slippage with double bid/ask so I adjust accordingly.

If I were you, I would play around with the stops and figure out which type suits your personality. That is the way to go. Just know what could go wrong and what your options are.

 

OldTrader - thx for the additional info.

sprstpd - Yeah, I guess I will have to play with the different stop behaviors.

One thing I don't get is this. How can a stock trade outside of the Bid/Ask prices ? Is this always because of badly reported prices ?

Take a look at my T&S for IMML today. Price first went below my stop of 17.93$ at 10:58:14. 400 shares traded at 17.952$. The Bid/Ask then was 17.95$ & 17.96$. Shouldn't shares always trade at or between the Bid/Ask prices ?