Can you bracket the current price- like this?

R

rogerwilcom

I was wondering if this is possible or if it was against exchange rules. Or possibly it depends on who you trade through.


Let's assume the current stock price is $5. You want to place a Buy-Limit at $4 and a Sell Short-Limit at $6.

Are the following scenarios possible?

A) If the Sell-Limit is filled @ $6. You don't want the Buy @ $4 to cancel. It remains. You are now short. You place a third order, a Buy-Limit at $5.50 to cover and be flat.

B) That Buy-Limit sitting at $4 is filled. You do not want the Sell Short @ 6 to cancel. You are now long. You place a third order, a sell at $4.50 to be flat.


I don't wish to be "boxed". I'm not trying to be long/short at the same time. I'm simply trying to bracket the current price and fill whichever order that is hit first. Without cancelling the other order. My only question is, are you prevented by anyone from doing this.


Thank you.
 
Quote from rogerwilcom:

I was wondering if this is possible or if it was against exchange rules. Or possibly it depends on who you trade through.


Let's assume the current stock price is $5. You want to place a Buy-Limit at $4 and a Sell Short-Limit at $6.

Are the following scenarios possible?

A) If the Sell-Limit is filled @ $6. You don't want the Buy @ $4 to cancel. It remains. You are now short. You place a third order, a Buy-Limit at $5.50 to cover and be flat.

B) That Buy-Limit sitting at $4 is filled. You do not want the Sell Short @ 6 to cancel. You are now long. You place a third order, a sell at $4.50 to be flat.


I don't wish to be "boxed". I'm not trying to be long/short at the same time. I'm simply trying to bracket the current price and fill whichever order that is hit first. Without cancelling the other order. My only question is, are you prevented by anyone from doing this.


Thank you.
More...

It depends on how stupid your platform is. With IB (Interactive Brokers), you don't specify whether sell orders are sell short or sell to close ... it just does whatever the logical thing is based on your position(s) [long/short/flat] at the time the limit is hit. So what you described would be totally allowable normal multiple order placement. I know some brokers like TDA have you specify short sell or short to close, so I don't know whether a sell short order would cancel as soon as a long (same symbol) is filled ... but it shouldn't.

Bottom line, yes you should definitely be able to do those orders and if your broker doesn't let you, find another one.
 
Thanks you two for chiming in. One last question. Is this the same case in futures trading? Obviously the software could make it or break it. However, I just want to make sure I'm not breaking any sort of exchange rules.



Rosy2. I do not use IB. But thank you for the offer.


Best,
Roger
 
Should be the same for futures as anything else.

If it can be done through a major broker like IB I doubt very much it would be a violation of any exchange rules. Unless I misunderstood the scenario you suggested, I don't see how it's anything but normal range-type trading/scalping. I don't see how you would need any special setup to do this. You are basically setting orders to fade at opposite ends of a range, and once filled you're exiting for a small profit while keeping your option open to fade at the opposite end of the range. In fact ordinarily you would have to go out of your way to have orders cancel after fills, by way of OCO's (sometimes called "OCA's").
 
I guess my concern in all of this is was...

If you place the initial bracket. A long @ $4 and the sell @ $6. That $6 sell may be marked as a short sell since you don't have a position. However, if it hits $4 first, and then hits $6, you are selling your position not going short.

I didn't know if when you submit that original order, that internally, the order is marked as a short sell(since you don't have inventory). And therefore, if it hits $4 first, and then $6, it wouldn't properly sell that long position since the order was marked as short.

Guess these guys are smart enough to sell the position instead of trying to go short.


Thanks again.
 
Quote from rogerwilcom:

I guess my concern in all of this is was...

If you place the initial bracket. A long @ $4 and the sell @ $6. That $6 sell may be marked as a short sell since you don't have a position. However, if it hits $4 first, and then hits $6, you are selling your position not going short.

I didn't know if when you submit that original order, that internally, the order is marked as a short sell(since you don't have inventory). And therefore, if it hits $4 first, and then $6, it wouldn't properly sell that long position since the order was marked as short.

Guess these guys are smart enough to sell the position instead of trying to go short.


Thanks again.
More...

If you're that concerned I would ask your broker about it. If they say you will run into problems with what you're trying to do, I would switch platforms. It should be able to automatically figure out how to execute orders based on your net positions, period.
 
Quote from rogerwilcom:

I was wondering if this is possible or if it was against exchange rules. Or possibly it depends on who you trade through.


Let's assume the current stock price is $5. You want to place a Buy-Limit at $4 and a Sell Short-Limit at $6.

Are the following scenarios possible?

A) If the Sell-Limit is filled @ $6.

B) That Buy-Limit sitting at $4 is filled.


I don't wish to be "boxed". I'm not trying to be long/short at the same time. I'm simply trying to bracket the current price and fill whichever order that is hit first.


Thank you.
More...

=========
You could,
but i would;
not; repeat,i would not do it[buy@4] generally speaking.Under $5 is penny /junk stock , junk like Citigroup which is a penny stock but reverse split 10 times [so actually its $3.47[ times 10 is $34.70, for the simpleminded/uninformed.,LOL]

Exception merely PROVES the rule;
wisdom is profitable to direct.:cool:
 
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