Stoploss and Stopbuy execution question.

Discussion in 'Order Execution' started by CasperCRF, Nov 18, 2005.

  1. When are stop losses triggered? If a stock is trading at $10.10 and my stop loss is set at $10, will the stop loss trigger when the Bid reaches $10, or when the Ask is at $10 or at the first print of a $10 sale?

    Same thing for a stopbuy, if I have a buystop at $10.10 and the stock is trading at $10, what will cause the buystop to trigger?
  2. With most software program settings as well as broker orders, it's usually the last trade price that sets off a stop. However, with some programs, you may choose to have the bid or ask be the "trigger". Most often though, it's the last sale price.
  3. qazmax


    Depends on where the stop resides... your broker or the exchange or ECN...

    Brokers make their own rules... just ask them.

    Exchanges go off the last trade.

    ECNs can vary... but most use the bid ask since they may have a thinner OTC stock...

    Options almost always go off the bid or ask and not the trade since they do not trade as often.

  4. Yep, as mentioned, it depends on where you send the stop order.

    For example, if you use REDI+, stops sent to the NYSE are triggered by the last trade price. Stops sent to SIGMA (which uses ARCA) are triggered by the bid or ask (e.g. a $10 sell stop is triggered when the bid is <= $10.
  5. We rarely, if ever, use actual stop orders...we just use alerts..then you can make a good decision rather than having someone else make a bad decision for you.

  6. salmo


    I learned the hard way that Cybertrader uses the bid/ask as a trigger for a stop. Was a bit of a shock the first time as I had always known stops to be triggered by the trade price. Not really an issue on thick Nasdaq stocks, actually a benefit. However, on listed stocks that are a little thin (500,00/day range) Often the specialist will move off the bid for a second or two, and your stop is triggered by a low ECN or regional exchange bid. In this scenario you get stopped and then the price recovers almost immediately. This is frustrating when it happens!!! This of course can be solved by using a mental stop.