Opening Orders Are They Any Better?

Discussion in 'Order Execution' started by jayjay121, Apr 4, 2012.

  1. Hi, Can someone help me understand the following?

    If i put in a opening order 5 mins before open say at 1% above Fair value estimate price, Assume there is no news on the stock and ive done my homework. But stock actually opens 2% above, would i get filled still at the 1% above where i placed my original order?, or would i get filled at 2% price?.

    Im guessing i would still only get filled at 1% above price and now be 1% down, am i correct?

    Or would i even be filled?, as price never opened or touched my order. Does it work like a limit order and once price has moved through my order i would be filled?

    If opening order still gets filled at above price on same side for worst price then i feel perhaps Im better off waiting for market to open before i put in my orders, what do you think?, if that is case above then surely there is no edge to opening orders and more edge to waiting to see where price opens.

    Im guessing it depends if the opening print touches your order, even so though it could put you at a disadvantage, and maybe best waiting a min or so.
  2. rmorse

    rmorse Sponsor

    You never mentioned which asset class or exchange you're entering your order to. However, any orders entered at the NYSE before the open, that are executable at the open, get one price. If you offer stock at 25.00 and the open is 26.05, you get 26.05. Each exchange will have one opening price, but that price will differ from exchange to exchange.

    Does this answer your question?

  3. hi, sorry. I will be trading stocks only. Some will be NYSE, some NASDAQ.

    Say for example i want to be short only......So if my opening order is sent out at 25 but market opens at 26, i get 26 fill for sure?. If thats so then this changes my view and opening orders are better than waiting for market to open.

    So if market opens at 24 say, i would not be filled?, it is only if above for better price?

    kind regards,
  4. rmorse

    rmorse Sponsor

    Correct. If you're entitled to a better price, you get it. If you not entitled to an execution, and you enter a limit on open order, your order will cancel. If you have a limit order, you'll stay out there.
  5. opening orders cancel if not touched on first print so perhaps a limit order would be ok as your order is still out there and you could always go back and cancel say 10 mins later if not filled.

    So i could put opening order quite far away but the risk is im unlikely to get filled, or could use a limit order instead before open at the same far away price and it stays there and possible to get filled minutes later. Is this correct?

    Limit order may be best for me then as i need to enter lots and lots of positions and will not have time to re enter them if not filled at opening print, but limit order will stay there in case price comes to it, and if not i could set it to cancel 10 mins later, is this possible?

    will a limit order work the same way if placed before open?, that it will execute at better price if price opens higher (if going short)? But difference is the limit order will stay there if not filled at open?, where as opening order will cancel itself if not moved through?
  6. rmorse

    rmorse Sponsor

    None of our platforms offer "good for 10 min", or "good til 10am." I' m sure someone does that at the platform level. That's not an exceptable order at the exchange level.

  7. ok forget 10min example as i can go back and check myself.

    But what about limit order?, will it work the same way as opening order in that i get a better fill if it opens higher?
  8. rmorse

    rmorse Sponsor

    A limit order entered before the opening works the same way it would entered at any other time, except it's not active until the open.
  9. thanks for your patience.

    so why do traders use opening orders when they could use limit orders instead and have a better fill rate?............a opening order will cancel after the opening print where as a limit order will not. Opening order type traders often complain about their fill rate, wouldn't they achieve a better fill rate with limit orders?. Price will often retrace to our price after the first couple of mins to achieve a fill. Opening order traders say their edge is because they get a ineffiency in price at the open, but open is often the most volatile time of the day and id say the first 5 mins can be inefficient, not just the opening print.

    what do you think?
  10. rmorse

    rmorse Sponsor

    I never traded that way. It's reversion to the mean. If the open is too big of a move, they are looking for a small retracement. Not my thing, but I guess they only care about the opening print. Then they move on the the next trade.
    #10     Apr 4, 2012