https://www.interactivebrokers.com/en/index.php?f=14186 I will ask IB if the price cap applies to institutional clients and individuals classified as "professional."
Can you provide an example? Are you entering orders 5% to10% away from the last sale, or something else?
IB's price capping algorithm is idiotic when there is a market-moving event for a specific security. I have a couple of examples where IB's algorithm has hurt me financially. It basically comes down to the fact that I cannot control my risk at IB in certain situations. IB apparently thinks it knows better than me how to control my own risk (which is ridiculous). I intended to switch to Lightspeed after I got dinged at IB, but the answers I got for the question I asked made it seem like price capping would apply at Lightspeed as well. Maybe it is an industry wide restriction. If it is, the capping regulation needs to be revoked.
This is not a broker issues but a regulatory and exchange rule. It is meant to reduce the number of obvious error trades. It makes it very hard to buy or sell a stock that was halted in the new opening rotation. It also helps the exchanges like Nasdaq not to have to maintain orders on their book to buy stocks or sell stocks at limit prices that are no where near the current price. I think the rule is silly and requiring a second confirm on any of these orders should be enough to provide protection, but it is not up to us.
This is relevant when you try send a premarket order for a gapping stock or an ipo. You have to contact IB trade support on each case for the cap to be lifted
It also occurs in situations where the stock has moved significantly and traded at these new levels. If I in that type of situation want to execute a marketable limit or just a limit further away from the new traded level, the limit price is capped. I have to wait for somebody else to trade, before I am allowed by IB to trade. In this situation, the stock has not moved 5 or 10% away from the last sale. Thus I do not believe this is due to a regulatory or exchange rule?
As far as I know, this price caps applies to everybody, not just institutional or "professional" traders. The whole time I was with IB, I was a retail average joe trader and I received notification about those price caps too. TBH, for the whole time when I was with IB, I can only recall being hit with a price cap once and that was during a forex trade when the market was really volatile and IB limited the max. entry price that I could get into on a "buy" trade so it actually worked out in my favour. So overall, this is one of the very few things that I didn't have any negative experience with when I was with IB so I left it alone. If you really find it bothersome, you can create a ticket in the message centre and ask them to remove it.