What is the difference between IB Pegged and Market orders?
Appreciate your help.
Appreciate your help.
IB Pegged Orders
- Thread starter Fight Club
- Start date
Common guys. It's a legit question. Somebody must know that.
Where is def when we need him?
Where is def when we need him?
It could be that nobody is supposed to talk to Fight Club.
(Or was it nobody is supposed to talk about Fight Club?)
I know you reminded me once, but I forget after a while.
Maybe everyone else does, too. :eek:
But while I'm here... this is from IB's website. I went to "Search" then entered "pegged" and "order" (without the quotes).
Pegged Market Orders
================
Description
Your order is pegged to buy on the best offer, and sell on the best bid.
Examples
Stock XYZ is trading with a bid of 50.00 and an offer of 50.02. You select Instinet as the order destination, and create a pegged order to buy 100 shares of XYZ. Your order is submitted as a limit order pegged to the best offer (currently 50.02). If the ask price rises to $50.10 and the order has not executed, the limit price moves to $50.10. If the price drops back to $50.00, the limit price remains the same.
(Or was it nobody is supposed to talk about Fight Club?)
I know you reminded me once, but I forget after a while.
Maybe everyone else does, too. :eek:
But while I'm here... this is from IB's website. I went to "Search" then entered "pegged" and "order" (without the quotes).
Pegged Market Orders
================
Description
Your order is pegged to buy on the best offer, and sell on the best bid.
Examples
Stock XYZ is trading with a bid of 50.00 and an offer of 50.02. You select Instinet as the order destination, and create a pegged order to buy 100 shares of XYZ. Your order is submitted as a limit order pegged to the best offer (currently 50.02). If the ask price rises to $50.10 and the order has not executed, the limit price moves to $50.10. If the price drops back to $50.00, the limit price remains the same.
Hi rgelite,
Thanks for visiting.
I know the definition from IB's website. I just don't see major difference between Pegged and Market orders. To my understanding they both pegged to the best bid/offer with a slight variation. Maybe somebody more experienced can point out an useful application.
BTW you should see this movie again, it's quite liberating. Maybe too much of unnecessary violence, just ignore it.
Thanks for visiting.
I know the definition from IB's website. I just don't see major difference between Pegged and Market orders. To my understanding they both pegged to the best bid/offer with a slight variation. Maybe somebody more experienced can point out an useful application.
BTW you should see this movie again, it's quite liberating. Maybe too much of unnecessary violence, just ignore it.
...................
use the following example from ib web site.
the difference is, with a market order, you are not guaranteed to get the best offer (even if your order is the first in line). mm may fill your order with a spread - this is almost guaranteed.
a pegged order is a limit order. your order floats with the nbbo, and the execution price is guaranteed to be the best offer at that moment.
it seems ib only supports one of those pegged order types. and ib does not allow you to specify an offset.
what really puzzled me is the last scenario,
If the price drops back to $50.00, the limit price remains the same.
'the limit price remains the same' as $50.00, $50.02 or $50.10? does it make sense if it remains $50.10? it means i'm bidding 100 shares of XYZ at $50.10 when last sale is $50.00 or lower.
btw, i never use pegged order. just hope this can be helpful.
- oo7
Description
Your order is pegged to buy on the best offer, and sell on the best bid.
Examples
Stock XYZ is trading with a bid of 50.00 and an offer of 50.02. You select Instinet as the order destination, and create a pegged order to buy 100 shares of XYZ. Your order is submitted as a limit order pegged to the best offer (currently 50.02). If the ask price rises to $50.10 and the order has not executed, the limit price moves to $50.10. If the price drops back to $50.00, the limit price remains the same.
the difference is, with a market order, you are not guaranteed to get the best offer (even if your order is the first in line). mm may fill your order with a spread - this is almost guaranteed.
a pegged order is a limit order. your order floats with the nbbo, and the execution price is guaranteed to be the best offer at that moment.
it seems ib only supports one of those pegged order types. and ib does not allow you to specify an offset.
what really puzzled me is the last scenario,
If the price drops back to $50.00, the limit price remains the same.
'the limit price remains the same' as $50.00, $50.02 or $50.10? does it make sense if it remains $50.10? it means i'm bidding 100 shares of XYZ at $50.10 when last sale is $50.00 or lower.
btw, i never use pegged order. just hope this can be helpful.
- oo7
Description
Your order is pegged to buy on the best offer, and sell on the best bid.
Examples
Stock XYZ is trading with a bid of 50.00 and an offer of 50.02. You select Instinet as the order destination, and create a pegged order to buy 100 shares of XYZ. Your order is submitted as a limit order pegged to the best offer (currently 50.02). If the ask price rises to $50.10 and the order has not executed, the limit price moves to $50.10. If the price drops back to $50.00, the limit price remains the same.
This is the explanation I received from def:
"a pegged order is basically a market order on instinet. it is an order type supported by instinet, so we support it. I think a market order will basically do the same thing. I also think you'd be better off using SMART as it will route to the exchange with the best offer."
I don't see any major difference. You will pay the spread in both cases.
Cheers.
"a pegged order is basically a market order on instinet. it is an order type supported by instinet, so we support it. I think a market order will basically do the same thing. I also think you'd be better off using SMART as it will route to the exchange with the best offer."
I don't see any major difference. You will pay the spread in both cases.
Cheers.