I spoke to IB today, and I wanted to double check with you guys about this. Stock XYZ, traded on NASDAQ or NYSE, closes at $10.00. I want to place an order to buy the stock on the open the next day. I would pay anywhere between $9.75 and $10.75 for the stock (this is a hypothetical, there's a reason for the upper bound). So I want to make sure that if the stock happens to gap down and open under $9.75, I am not filled. Also, if it gaps up too high, I want to avoid being filled. I want my fill in a specific range. IB CS told me that a stop limit order would do this. He said the stop price would be $9.75 (the price at which the order is triggered). He said I must then enter $10.75 as the limit. This would ensure that I don't get filled higher than $10.75 or lower than $9.75. My questions are - can I use a stop limit order to initiate a position? I thought I had read somewhere on here that this order type can only be used to close an existing position. Second, let's say that the stock opens at $10.00. My stop is hit and a limit order is submitted to buy. Since the highest price I am willing to pay is $10.75, is there any chance (on the NYSE I guess) that they will fill me at that price regardless of where the majority of stock prints at in the first minute or two? I assume that SMART is supposed to fill me on NASDAQ at the best possible price so that if the majority of trade in the first 30 seconds is right around $10.00, I should get a similar fill. I know this is a pretty naive question, but I'm trying to make sure I submit my orders in an optimal way.
Yes, but even if your stop is triggered you may not get filled if the price gaps above your limit. Be sure that if the specialists expect a big move they will not fill you at or below the limit. Do you think they are crazy or something? Unless you spread the stop and limit sufficiently apart. But for .25 or .50, even .75 you may miss a good trade. IMO with a good broker and market orders you can make the most. Alex
Interesting... I called IB Hong Kong support line last night to get a second opinion and they told me that this would NOT work. I think what she meant, though, was that in a fast market I could get filled for less than the stop price. In fact this is the main concern - the upper limit was just a theoretical question. I am mainly concerned with placing order to buy (sell) at the open and not getting filled if the stop gaps open in the wrong direction. As the first respondent said, NYSE is a bit of a different story than NAZ.
you wont get filled if it gaps below with a stop-limit order at the open. That is if you remove your order after the opening, no way to do this last thing automatically as far as I know.