IBKR : Using Limit Orders 4% Above The Market ?

Nobert

Nobert

I don't have a screenshot at the moment, but whenever i place a limit order 4% (?) and above the market, i receive some sort of message about ,,IB trying to ensure a fair market'' or something like that, which makes, absolute sense.

Few questions that i have :

#1. Do orders like that get filled at all, say a limit order of 8% above the market.
#2. If it is - ,,Against the rules", what are the consequences of braking this rule ?
#3. Could a market order go way, way beyond those 4%, like, 40% above the market ? Say after market/pre market hours, or in case of low liquidity.

It's just a practice that i brought from bucket shops, where you couldn't get filled 5% above the market., thus, you had to play this way.
 
Maverick2608 said:
A limit sell order 4% above the market?
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Sorry, didn't made myself clear enough.

When i place a BUY limit order, it says that it cannot be more than 4% or something like that, than the current market price, to ensure a fair market.
 
1) If the stock is illiquid enough yes depending on the size of your order. Your buy limit order: 12.000 shares. Size of the order book up until 4% above current market: 3.800. So you burn through the order book.

2) I haven't tried. Maybe IB will put the 4% ceiling on your limit order, which then becomes active with a 4% cap. Or maybe the order cannot become active. You will not receive a fine or be banned or anything like that. They are supposed to do it to protect you. But it can sometimes be really frustrating, if market conditions make it rational to make a buy order much higher than the current market for instance when new information is made public.

3) Yes, when new information hits the market or due to low liquidity. But in that situation you can also experience that your market order is not accepted "to protect you," which can be frustrating.
 
Maverick2608 said:
1) If the stock is illiquid enough yes depending on the size of your order. Your buy limit order: 12.000 shares. Size of the order book up until 4% above current market: 3.800. So you burn through the order book.

2) I haven't tried. Maybe IB will put the 4% ceiling on your limit order, which then becomes active with a 4% cap. Or maybe the order cannot become active. You will not receive a fine or be banned or anything like that. They are supposed to do it to protect you. But it can sometimes be really frustrating, if market conditions make it rational to make a buy order much higher than the current market for instance when new information is made public.

3) Yes, when new information hits the market or due to low liquidity. But in that situation you can also experience that your market order is not accepted "to protect you," which can be frustrating.
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Thanks.

Maverick2608 said:
1) "to protect you,"
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Makes sense.


Maverick2608 said:
can be frustrating
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No, it actually isn't.
Depends on the character ofcourse.
Only first few times it was like, ,,da hell".

Being ,,safe" and slow, it's better then F1 joining 90/90/90.
 
Your find your post confusing. Are you looking to buy right away up to a limit price? Or are you looking to take advantage of unusual mispricings and want to, for example, put in a sell limit at 4% above current market?

If the former, then of course you can do that, any broker and market is very happy to fill you all the way to your limit order, far from current bid/offer and let you rip through the order book.

Where it gets trickier is with the latter. Depending on broker and exchange there are limitations how far out you can set limits to enter into positions to exploit, for example, fat fingers, or the like.

Nobert said:
I don't have a screenshot at the moment, but whenever i place a limit order 4% (?) and above the market, i receive some sort of message about ,,IB trying to ensure a fair market'' or something like that, which makes, absolute sense.

Few questions that i have :

#1. Do orders like that get filled at all, say a limit order of 8% above the market.
#2. If it is - ,,Against the rules", what are the consequences of braking this rule ?
#3. Could a market order go way, way beyond those 4%, like, 40% above the market ? Say after market/pre market hours, or in case of low liquidity.

It's just a practice that i brought from bucket shops, where you couldn't get filled 5% above the market., thus, you had to play this way.
More...
 
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