stop order

Discussion in 'Order Execution' started by clearpicks, Jan 20, 2007.

  1. What whill happen if I enter a buy stop order with stop price lower than the current market price? Will this buy stop order simply be rejected by the exchange, or it is elected to market order and got executed immediately? Does different exchange have different rule to handle such scenario? For those exchanges where stop order is not a native order type, how do brokers simulate stop order in such a scenario? Do they do a sanity check to ensure the buy stop price is higher than the current market price? Help is appreciated.
  2. shovel52


    People enter those type of trades all the time, thinking that price is going to float down to their entry point . But as far as getting an instant fill with a market order is unknown, since most exchanges dont except market orders, and the brokers software
    has to turn the limit order into a market order before it is transmitted. That is the case with IB anyway. The limit order is transmitted immediately if there is someone on the other side of the trade at that moment. Is that the question?Is this the correct answer anyone?
  3. shovel52,

    Thanks for the reply. However, I am asking about how stop orders are handled, but not limit orders.

    - Clearpicks
  4. zzzap


    This happens to me once in a while. I get filled at market instantly. This applies to IB trading US stocks. I don't know about different markets/brokers.
  5. I'm not 100% certain but I don't think IB does a sanity check. I have sometimes clicked the wrong column in the booktrader and instead of a sell-stop below price I did a buy-stop, with the price higher already of course. I was in immediately :).

    But why not just try it? You won't die, whatever happens, and you can get out immediately if you don't like it. Best to panic under trial circumstancesand not when it counts.

  6. On my old platform it would be executed instantly (since the stop level would of been already violated).

    I recently started using Infinity Brokerage's DOM platform. It has a check box that eliminates entering 'goof up' orders like this. I love it.

    ie: If the price is at 55.25 I can not enter a buy limit order for 56 because it would be filled instantly. It would instead change my order to buy-stop order. Nifty.