IB gives its clients the option to "pre-route" orders for listed stocks to the major exchanges 3 minutes before the opening bell. What are the pros and cons of doing this vs. a regular "SMART" order?
If you want to participate in the opening print on an exchange, a SMART routed order will often prevent this from happening, by routing your order away from the exchange.
Pros: You do not care what it is as long as it is the opening price Cons: You might get surprised (overwhelmed) by the opening price
It depends where the liquidity is. Many stocks trade 95% on the NYSE... and ECNs are deadsville. Virtually 100% (50-70 orders total) of my SMART orders are routed NYSE pre-9:30... because that's where the liquidity is. rm+
instead of a smart order why not just preference order to the nyse. you can pre route an order to the nyse at any time. please explain the reference to3minutes
This is no significance of my own choosing, however IB's trading software allows you to select an option that will automatically pre-route your order to the NYSE 3 minutes before the opening bell. From the input provided, I gather that this ONLY applies to NYSE-traded stocks (simply because NASDAQ stocks don't trade on NYSE) and that if you're trying to get into the stock as early as possible, regardless of the opening price, that's it a good idea to use this feature.
alanm is correct, it is re-route. It goes onto an ECN, then at 9:27 it flips to NYSE or AMEX depending on what you trade. You can have it avoid going onto an ECN pre-market by checking RTH (regular trading hours only) box in order defaults. If you do, it'll sit as pending until 9:27, then it'll go live on NYSE or AMEX.