Stop order execution - trigger on bid?

Discussion in 'Order Execution' started by traderdani, Oct 26, 2006.

  1. Hello,
    this is my first post.
    I had a couple of bad experiences with stop orders, with E-trade.
    Now, I don't know if it's normal and I shouldn't get upset, or if it's not normal and then I should change broker right away....
    I have been trading for the last 6 months, so I don't have much experience.

    Here is what happened twice: I place a stop order, and when the bid reaches that price, they turn my order into market order, and guess what.... the order gets executed at a price higher (if I am long) then my sell stop, or lower (if I am short) than my buy to cover stop. But here is the interesting thing.... the price never reached my stop during the day!!

    The first time I called them because I wanted my position back, I mean I looked at the chart and the price never got to my stop.... after 45 minutes on the phone they said "we'll open a trade inquiry".... I started laughing of course....
    Well, they said that at some point during the day the bid reached my stop and it was turned into a market order.
    That sounded a little strange to me, I mean I trade the price, not the bid.....

    So, my question is: is it normal that the order gets triggered on the bid?
    If not, I need to change broker now..... any suggestion is welcome.

    Thanks for your help
  2. Serious active traders don't use E-trade. Consider Interactive Brokers, BUT you must work hard to learn about the mechanics of order execution, in order to know what you are doing, so that you can be able to benefit from IB's offerings.
  3. ER9


    your question confuses me a bit? i'm not sure if you understand that stops are triggered from the bid and ask....not price because of your last question about bid.

    longs are triggered from the ask, shorts are trigered from bid. if you look at a price chart after close it wont show you the bid/ask spread for the day. at least im not aware of any that do.

    depending on what you trade, stocks, futures, fx....that spread could vary greatly above or below the actual price.

    the other part of your question about your order executing at a price higher or lower than your actual stop, if im understanding you correctly, could just be slippage. there's no guarantee that once your stop is triggered you are going to get out at that price. depending on liquidity and how fast the market your trading moves could determine what price that you actually end up selling at.

    that being said if your trading a really fast moving volatile market and your stop gets triggered, if the market suddenly reverses, i could see situations where you would get filled above your stop for longs or below your bid for shorts. its definatelly possible that it could happen.
  4. Dak


    ER9 is right. But even far away from the price quotes ( bid or ask), as soon as your order is filled you ARE the market. You can't have an order filled outside of the daily H L range ( or hourly, etc..).
    The only possibility I see is an internal matching orders machine who executes some orders between clients, and NO report of executions are sent to the central market ( so you are outside of the range of the market data). Very common on forex Mkt:D , but strange behavior for a central Mkt place:mad:
    So, if you are SURE ( check carefully, because you are weak in order execution...) that this broker fill orders at price where the market never go one or two minutes after your fill ( large security margin), then you have more than enough to fill a complaint against him.
    Suggestions of others members are not bad : change of broker, and work on order executions:D
    By the way, you say that you have six months of trading. What kind of trading? Position, intraday? Results?
  5. There needs to be a print, not just a bid or ask, at your stop price on the primary exchange where the stock is listed, e.g. NYSE, NASDAQ. Once a primary print at, or better than, your stop hits the tape you're in the market, but not until that point. For NYSE stocks be aware of where you place your stops. The specialist knows who's there with stops and will spread the market and give bottom prints to the whole lot of stop orders. This is most common around "the figure" (a whole number stock price such as $52.00, $62.00), especially so around price multiples of $5.00 ($10.00, $15.00). C'mon, he's got his eye on that new Bentley, ya know!

    Good Luck
  6. Thanks all. I think I understand it better now.
    The reason I was confused was the fact that when I looked at the chart at the end of the day, my stop price was never reached.
    When you say I need to work on order execution, can you please elaborate?
    Does it mean that once I decide a stop, I need to adjust it based on the volatility of the stock I am trading?
    I don't do intraday trading, I usually hold my position anywhere from 2 to 15 days. I had only a couple of trades I held for 20 days.
    I am learning, trying few setups, and trying to avoid "impulse plays", which of course happened.... with some loss.
    Results... I am positive, nothing exceptional, but my goal right now is to learn technique and discipline, and build some statistics on what works and what doesn't.
  7. don't look at 'the chart'

    look at the time/sales
  8. yeah, but the price he got filled should print and therefore be on the chart.
  9. no, it will not necessarily be on the chart. it depends on the charting program, and how it works.

    i have seen several charting programs that due to their update latency etc. will NOT show the full price range necessarily. if a fill happens but then price action turns around, i ahve seen that price NOT reflected on a chart several times.

    however, time/sales will show every print.

    i don't know about CME, but CBOT lists every time/sale over the course of a trading day on their website for their products.

    a chart is a graphical representation OF price, but depending on the program etc. it does NOT necessarily show the full price range. again, i can state this is necessarily true, DEPENDING on the charting program
  10. ROR, what kinda program are u usin'; ib prints every single trade on the chart, even if it is 1 meager lot goin' off $2 away. it may happen at times there's a missin' print but that's as rare as it gets.
    #10     Oct 28, 2006