Is it ok to use market orders in the TWS when trading the QQQ on Island? IB will convert it to a limit order at the best available price, or am I wrong? (newbie at IB) Thanks
Market orders for the QQQs on island work great. I use them almost exclusively, normally get a fill within 1 penny of the best price or better. Stops on island also work well. IB basically converts your market order into a high limit and since the book is so liquid, there is never any problems.
When you place the Market orders, you are using ISLAND. With the API only BEST is available. What would you predict the difference would be?
Your fills will be somewhat slower since you could get routed to AMEX and NYSE. I estimate this would happen less than 50%, since ISLD is usually has the best bid/offer about 50% of the time and you could also get routed to other ECNs, which are just as good if they have the size. Fills on amex and nyse will be at least 5-10 seconds slower I think, and could be a problem if you use limit orders and are trying to buy in a very fast rising market, etc. In general though, the QQQs are very liquid no matter where you go, so you should be ok.
Thanks for your comments. My understanding is that IB's BEST EXECUTION recently stopped using AMEX for QQQ. I guess that leaves us with the risk of possible routing to other non ECN's.