9:30AM Open Market Transactions

D

Doglover

Hi, when I look at stock gains, they normally go off the 9:30am open price. I'm using Ameritrade, and when I put in an order for market price (no limit) hours before the market opens, the buy order doesn't go through at 9:30am, but rather not until 9:31 to 9:32 am. The problem, is the stock was up 5% the day I bought it, yet I was -5%. The Stock price went up from the 9:30 open 10% by 9:32, (which on a $10,000 trade would be a $500 loss for a day trader as opposed to a $500 gain).

My question, is, Ameritrade support is telling me the open rates at 9:30 isn't really the price that the markets opened at, that they opened the stocks I purchased at 9:32am (although even their own ThinkorSwim platform shows a 9:30am open price that's 10% lower). Does that mean all daily charts are wrong (from Yahoo Finance, ThinkorSwim, Nasdaq) that show stock has gone up 10% in a day, or am I getting fed wrong info by the Ameritrade rep? How does one get the actual 9:30 open market price?
 
The lions's share of orders placed through discount brokers do not go through an exchange -- they go to a "wholesaler" first, who will attempt to wring some profit off of your order, paying your broker a small amount per share for the privilege. Unfortunately, this can result in some really bad executions, at least in my experience, especially when trading outside of regular market hours.

I'm not sure what your broker's policy is regarding orders submitted before the open, or what the SEC stipulates (if anything). You might ask your broker where the order was routed when you put it in. If it's (for example) a Nasdaq stock and you want to hit the Nasdaq open, unless your broker (or the "wholesaler" to whom they sold your order) officially submitted that order to Nasdaq before 9:28 am, you won't necessarily get to trade at the official Nasdaq open.

One way around this would be to direct the order to whatever exchange is the primary exchange for the stock you're trading (generally Nasdaq or NYSE, if it's listed). Some discount brokers do allow direct routing, although I'd guess that few clients know to use it in such situations.
 
Interesting Occam.. There could of been a difference in the Bid and Ask rate at 9:30, I'm not sure.. I didn't know that about the wholesaler step. What are some discount brokers that allow direct routing?
 
Occam said:
The lions's share of orders placed through discount brokers do not go through an exchange -- they go to a "wholesaler" first, who will attempt to wring some profit off of your order, paying your broker a small amount per share for the privilege. Unfortunately, this can result in some really bad executions, at least in my experience, especially when trading outside of regular market hours.

I'm not sure what your broker's policy is regarding orders submitted before the open, or what the SEC stipulates (if anything). You might ask your broker where the order was routed when you put it in. If it's (for example) a Nasdaq stock and you want to hit the Nasdaq open, unless your broker (or the "wholesaler" to whom they sold your order) officially submitted that order to Nasdaq before 9:28 am, you won't necessarily get to trade at the official Nasdaq open.

One way around this would be to direct the order to whatever exchange is the primary exchange for the stock you're trading (generally Nasdaq or NYSE, if it's listed). Some discount brokers do allow direct routing, although I'd guess that few clients know to use it in such situations.
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Good explanation. In addition, there is little reg nms protection on the open and the close. Each exchange and Ecn can have there own opening and closing price. For open and close orders, you will likely be better off directing your order to the primary exchange. If your broker does not allow that, I recommend not trading at those times.
 
Was it NYSE/AMEX? If yes, then that's normal as most stocks don't open until later, up to 9:40 or sometimes 9:45. NYSE opening auction is not the same as on NASDAQ which opens 9:30:00/01 exact.
When you pressed "transmit" on your order, it probably got routed to ARCA and the opening prints you see at 9:30:00 are from other ECNs which open before that. You not really guaranteed to get the open unless you transmit to all ECNs and cancel after the first ECN fills.
 
In the past you could tell by the symbol. All Nasdaq stocks had 4 letters. Niw, many Nasdaq stocks are also traded on NYSE and some Nasdaq stocks have three letters. You will have to go to their website. If you want to know the open from each exchange, you need access to time and sales that also provides the exchange.
 
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