Why is IB allows buy limit order with a price about the last price and stop loss price about last price? Same thing apply with shorting and cover short. These type of orders are illegal in most brokers, why is IB allowing it?
Do you mean "above last price"? Limit buy orders that cross the market are a tool commonly used to avoid market orders. I don't know what the rest of it means.
Your English is poor but I think I understand what you are saying. Suppose a stock's bid Price is 60.00. You can have a Limit Short Sell order for 50.00 and it is NOT illegal. IB will automatically add 1 cent to the current bid and put your short sell in at 60.01. Putting 50 just means you'll short at any price down to 50 whenever you can get your uptick. If the bid drops to 59.60, IB will move your short to 59.61. Some brokers are dumb. I remember when I used CyberTrader before and they would reject my order if it was below the bid. I would have to manually keep lowering my short and keep hitting submit. Good Luck!
Quote from Sanjuro: Suppose a stock's bid Price is 60.00. You can have a Limit Short Sell order for 50.00 and it is NOT illegal. IB will automatically add 1 cent to the current bid and put your short sell in at 60.01. Be careful. I don't believe IB does this. It's up to the particular market or exchange as to how they deal with orders that cross their market or the NBBO. If the thing suddenly gaps down, you may find yourself filled at a gap price that you don't want.
I do this a lot. Some brokers will warn you if your limit order is above the current best bid. In my case, it usually *is* my buy order - my unfiilled buy order - that is the current best bid, and I'm raising it in an attempt to get filled.