IB and stop limit orders - do they work?
- Thread starter toad57
- Start date
I know there was a time when I was new to IB (8 months ago) that users were complaining about IB stops not firing off and filling when they should have. At that time I was only scalping and wasn't using them so I couldn't comment.
I have since been doing a little swing trading and relying on IB stop orders for both entries and exits and have found them to extremely reliable. With my knowledge of their controversial history I watched them very close for some time but now I hardly pay any attention as they simply work as described. I think one of the reasons why they work nicely now may be the implementation of supersoes and the reliable liquidity that this option provides.
Now, if only we could get IB to give us trailing stops.
I have since been doing a little swing trading and relying on IB stop orders for both entries and exits and have found them to extremely reliable. With my knowledge of their controversial history I watched them very close for some time but now I hardly pay any attention as they simply work as described. I think one of the reasons why they work nicely now may be the implementation of supersoes and the reliable liquidity that this option provides.
Now, if only we could get IB to give us trailing stops.
One final question... let's say a stock is at 25.00 BID and 25.03 ASK and I am going to short sell the stock.
So, on my IB STOP LIMIT , what should I enter as my stop execution price? I know ( err... hope :eek: ) the stock is going to move downward.
If I enter an execution price that is higher than the current ASK will it trigger immediately? Or, do I have to enter a price that matches the current ASK to get an immediate trigger?
Thanks!
So, on my IB STOP LIMIT , what should I enter as my stop execution price? I know ( err... hope :eek: ) the stock is going to move downward.
If I enter an execution price that is higher than the current ASK will it trigger immediately? Or, do I have to enter a price that matches the current ASK to get an immediate trigger?
Thanks!
Toad, before I attempt to answer your question, I need to make sure we are using the same terms. In fact, since we are both using IB, let's use the IB terms to avoid confusion.
Could you reword your question using the IB terms "stop election price" or "stop limit price" to replace your use of "stop execution price".
Thanks.
JB
Could you reword your question using the IB terms "stop election price" or "stop limit price" to replace your use of "stop execution price".
Thanks.
JB
Yea, I worded that sorta lousy.
Hmmmm... this board only allows edits within 15 minutes of the post. Darn.
Here is reworded text (with additional query) in IB lingo:
One final question... let's say a stock is at 25.00 BID and 25.03 ASK and I am going to short sell the stock.
So, on my IB STOP LIMIT order , what should I enter as my stop election price? I know ( err... hope ) the stock is going to move downward.
If I enter a stop election price that is higher than the current ASK will it trigger immediately? Or, do I have to enter a price that matches the current ASK to get an immediate trigger?
And, it appears that my stop limit price should be lower than my stop election price in order to get a fill... right?
Hmmmm... this board only allows edits within 15 minutes of the post. Darn.
Here is reworded text (with additional query) in IB lingo:
One final question... let's say a stock is at 25.00 BID and 25.03 ASK and I am going to short sell the stock.
So, on my IB STOP LIMIT order , what should I enter as my stop election price? I know ( err... hope ) the stock is going to move downward.
If I enter a stop election price that is higher than the current ASK will it trigger immediately? Or, do I have to enter a price that matches the current ASK to get an immediate trigger?
And, it appears that my stop limit price should be lower than my stop election price in order to get a fill... right?
Toad57. I believe for a short, you must set the election price at least a penny below the Ask for it to trigger. If you set it on or above I don't think it works. I never set a stop that close, but I'm pretty sure that's how it works. So if somebody accidently sets a stop to sell short above the market, it will be invalid. So in your case, setting the election price between the Bid and the Ask should work, or even on the bid.
Toad, I'm going to deal with the easy question first:
>And, it appears that my stop limit price
>should be lower than my stop election
>price in order to get a fill... right?
If you are selling a stop limit, your limit price must be below your election price or you can't expect execution for obvious reasons. If you are buying, then the limit price must be above the election price.
>One final question... let's say a stock is at
>25.00 BID and 25.03 ASK and I am going to
>short sell the stock. So, on my IB STOP LIMIT
>order , what should I enter as my stop election
>price? I know ( err... hope ) the stock is going
>to move downward.
Sorry to be so precise and technical, but I fear I might give you bad information if I don't, so here goes...
In the above question, it sounds like you have just now decided that you wish to be short and are listing the NBBO from this moment of decision. In this case, you wouldn't use a stop limit order at all -- a simple limit order would be used. The stop flavor orders are used in advance when you want an order to be executed without your intervention at some distance from the current NBBO
>If I enter a stop election price that is higher
>than the current ASK will it trigger immediately?
>Or, do I have to enter a price that matches
>the current ASK to get an immediate trigger?
I think I know the answer to this question, but since, like ddefina, I have never considering entering a stop flavor order anywhere near the current NBBO, if I were to answer it I could be proven wrong. The answer *should* be that you have to enter a price that matches the current ASK *exactly* or it won't trigger. A stop election price on either side of the current price should not execute until the two overlap or cross whether the starting delta be only a penny or 10 bucks. I could test on Monday, but I don't think I will waste the $2 since there is *no reason* to be placing a stop order a penny from the NBBO.
Hope I haven't confused you more.
JB
PS, it is easy to get confused with all this and it doesn't help that IB's own website offers confusing and downright incorrect information...such as (emphasis mine)
>A Sell Stop order is *always placed below*
>the current market price of the security or
>commodity. It is typically used to limit a loss
>or protect a profit on a long stock position.
>A Buy Stop order is *always placed above*
>the current market price. It is typically used
>to limit a loss or protect a profit on a short sale.
Contrary to their "always" assertion, I set IB Stop flavor orders on the far side of the market all the time (sell higher and buy lower than the NBBO). I do this to take partials or to exit a position entirely once a certain profit objective is reached.
>And, it appears that my stop limit price
>should be lower than my stop election
>price in order to get a fill... right?
If you are selling a stop limit, your limit price must be below your election price or you can't expect execution for obvious reasons. If you are buying, then the limit price must be above the election price.
>One final question... let's say a stock is at
>25.00 BID and 25.03 ASK and I am going to
>short sell the stock. So, on my IB STOP LIMIT
>order , what should I enter as my stop election
>price? I know ( err... hope ) the stock is going
>to move downward.
Sorry to be so precise and technical, but I fear I might give you bad information if I don't, so here goes...
In the above question, it sounds like you have just now decided that you wish to be short and are listing the NBBO from this moment of decision. In this case, you wouldn't use a stop limit order at all -- a simple limit order would be used. The stop flavor orders are used in advance when you want an order to be executed without your intervention at some distance from the current NBBO
>If I enter a stop election price that is higher
>than the current ASK will it trigger immediately?
>Or, do I have to enter a price that matches
>the current ASK to get an immediate trigger?
I think I know the answer to this question, but since, like ddefina, I have never considering entering a stop flavor order anywhere near the current NBBO, if I were to answer it I could be proven wrong. The answer *should* be that you have to enter a price that matches the current ASK *exactly* or it won't trigger. A stop election price on either side of the current price should not execute until the two overlap or cross whether the starting delta be only a penny or 10 bucks. I could test on Monday, but I don't think I will waste the $2 since there is *no reason* to be placing a stop order a penny from the NBBO.
Hope I haven't confused you more.
JB
PS, it is easy to get confused with all this and it doesn't help that IB's own website offers confusing and downright incorrect information...such as (emphasis mine)
>A Sell Stop order is *always placed below*
>the current market price of the security or
>commodity. It is typically used to limit a loss
>or protect a profit on a long stock position.
>A Buy Stop order is *always placed above*
>the current market price. It is typically used
>to limit a loss or protect a profit on a short sale.
Contrary to their "always" assertion, I set IB Stop flavor orders on the far side of the market all the time (sell higher and buy lower than the NBBO). I do this to take partials or to exit a position entirely once a certain profit objective is reached.
Let's revisit the technique described by the Datek user:
Consider going short XXX trading 25.00 bid x 25.10 ask. I want to get it so I enter a short sales stop limit of 25.01 x 25.15 limit. Guess what, it goes to the top of the stack and gets filled at 25.10 as the bid is already under my activate price and my limit is above the ask of 25.10. I get all the share I want.
If the stock moves down to 24.50 bid x 24.55 ask then I cover by entering an order of 24.49 x 24.56 and get an immediate fill.
So, is there any way to achieve this with IB... i.e. getting short orders to fill well above the current bid price?
I watch this guy make chat room calls that consistently get short entries (buys) filled at a better price than the current bid.
Ideas?
Consider going short XXX trading 25.00 bid x 25.10 ask. I want to get it so I enter a short sales stop limit of 25.01 x 25.15 limit. Guess what, it goes to the top of the stack and gets filled at 25.10 as the bid is already under my activate price and my limit is above the ask of 25.10. I get all the share I want.
If the stock moves down to 24.50 bid x 24.55 ask then I cover by entering an order of 24.49 x 24.56 and get an immediate fill.
So, is there any way to achieve this with IB... i.e. getting short orders to fill well above the current bid price?
I watch this guy make chat room calls that consistently get short entries (buys) filled at a better price than the current bid.
Ideas?