IB and stop orders

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IB does not use the exchange stop facility for NYSE stop orders. While the election algorithm differs, they are broker held just like Nasdaq. From what I've been told this is done at the request of IB's institutional customers that don't want to tip their hand to the specialist.

As for their Nasdaq stops, they work fine provided you properly understand the election algorithm used and take it into account when choosing your stop price. IMO with all those out of market prints on the Nasdaq, having stops elected based on bids and offers is a superior solution.
 
For Naz stocks I guess the bid has to hit the stop or be below it twice for it to execute? Which basically means, if the stock is now trading below your stop the stop should get executed, right? Of course the inverse would apply for buy stop orders.
One more thing, I hope that the stop becomes a market order for an MM and not a limit order on an ecn, which could get skipped if the price is moving quickly. I wish I could know all this for sure, because stop losses are a very important thing for daytrading, and not being able to fully rely on them is harrowing at the least.

Thanks for your replies and information, in the end we will get to the bottom of this. Btw, is anybody out there completely succesful with his stops using IB for Naz stocks?
 
mazirus,
I doubt many would want a market orders to be sent to market makers who treat them like free options. Stop orders should get sent to the market(s) with the best price/liquidity.
 
def I completely agree.
I was wondering what happened if the order got routed to ISLD, as a limit order of course, because that is all they accept, and it does not manages to get executed because the market was moving too fast. Would this order get cancelled and rerouted automatically untill executed?
 
<i>For Naz stocks I guess the bid has to hit the stop or be below it twice for it to execute? Which basically means, if the stock is now trading below your stop the stop should get executed, right? Of course the inverse would apply for buy stop orders. </i>

Not the bid, at least two offers have to show up at or below your stop price in case of a sell stop.
 
For Naz stocks, a stop sell is elected with 2 offers below election price, a stop buy is with 2 bids above election price..... all according to IB's website.

But, I have numerous times when I SEE more than 2 bids above the election price and the stops just sit there (the color should turn from dark blue to green, meaning a working order... but many times it just doesn't). The worst case has been a 3pt sliappage on a short position a few weeks ago!

I will probably start trading NYSE stuff only and see what happens... meanwhile, we should send some kind of logs of the 'skipped' stops to IB and hopefully they care enough to check the audit trail and debug the TWS.
 
Rec. this today.
Dear B,

Sorry about the troubles you are having. There can be problems with stop orders.
We are in the process of updating the system and changes are going to made. We
apologise that this has caused you any inconvenience and thank you for your
patience and supports.

Thanks,
Sheri
IB customer service

Hopefully the cure will come soon,
BP


 
I just chatted with an IB rep and he is 'unaware of the problem with NYSE stocks', I will give it a try and see what happens.

Certainly with the nasdaq segregated mess, the stop logic is more likely to have bugs.

will keep u guys posted.
 
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