Horror story

C

cashmoney69

Today before the market opened, I placed a market order for RIO

at 47.71. My analysis showed that RIO still had some room to

grow and that this was a good price. I was confident in my

research and clicked "buy".

Market opens, and my stock instantly falls to 45.30, however my

computer shows that I have an open order for RIO at 47.71,

but no position. I was like "This cant be right, market orders get

executed instantly". But just incase, I franticly tried to cancel the

order before it could fall even lower (which it

did). I couldn't find the cancel button, so I called my broker on

speed dial and after a few minutes of talking, he figures out that

I had a market order and that market orders cannot be canceled.

As soon as I get off the phone, a box pops up and tells me that I

just bought RIO at 45.30. I sold as quickly as I could at 45.29.

If my order had gone through 47.71 , I would have lost all my

gains from the day before and then some in just 2-3 minutes!.

luckily I only lost commissions.

----

Lesson learned

1. Market orders cant be canceled

2. NEVER buy before the open

3. NEVER put too much faith in your analysis, no matter how good a set up looks.

- nathan
 
Why is this a "Horror Story"?

I cancel Market orders all the time in equities, they can be canceled, generally before 9: 30.

Wanna know an old trick, promise not to tell anybody, ok, If you have a market buy in @ the bell, and you wanna cancel, just enter a market sell if you are unable to cancel, just make sure you get it in before the bell.

I am sure this is grey area as far as being on both sides of the market, I have more than one account.


Happy Trading!

PS : How can you have a "market" order with a limit, this is a tall tale!
 
Quote from cashmoney69:

2. NEVER buy before the open
More...

When it comes to markets, I don't think it is a good idea to place an entry order when the market is not open. Exit is a safer bet, but never entry. I believe that that is the main lesson here. :)
 
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