IB's "Globex Stops" (Not what you think)

C

C. Coffee

I ran across another thread here mentioning IB's new implimentation of "globex stops". This is something that I really liked initially. After doing some fact finding I've come to the conclusion that it is not what it appears to be. At least it don't work the way I had wanted it to. The following is a message I posted on the IB msg boards and below is the response I got.

First of all, I appreciate the work done by IB to get native globex stop orders implimented. However, I don't believe what I originally wanted is being done. I'm looking for some detailed answers from IB's technical support to the following questions. I've read as much as I can find on these issues, including IB's, CME's, and Globex's website, so please don't just reference a website in the answer and say read here. That's not what I want. Ok, on with the questions:

Here's what I understand thus far (or think I do)

ES or NQ trading on globex is what I'm referencing here.

1. If I submit a "market" order to buy or sell then that order is transformed in to a limit order on IB's computers and then sent to globex as such. Right or wrong or ?

2. Now after I am in say a long position, I will immediately set a sell "stop order" for my stoploss in case the position goes against me thus stopping me out. This is the order that I originally wanted to go to globex and sit on the globex computers. Why? Well if IB's computers went down while my sell "stop order" was still on their computers, I'm screwed. However, the whole idea I was talking about with globex stops was to have this order on the globex computers so if IB went down I'd still be safe as the order would be executed regardless. I've been reading and this order still appears to sit on IB computers. Right or wrong or ?

3. I ran across this link, http://www.globex.com/electronic_trading/access_development/index.cfm and started to realize the only orders that globex accepts are limit type orders. Right or wrong or ? If so do "stop limit" orders sit on globex computers?

4. What version of the protocal does IB use regarding that link I posted?

5. I've read IB's page and it says only GTC orders are sent to globex. I don't understand exactly what those are. Forgive my ignorance, as I understand GTC means good till cancel, but not sure what order types they mean.

So bottom line I would like to know the following.

Market Orders = Resides on IB computers or Globex computers?

Stop Orders = Resides on IB computers or Globex computers?

Stop Limit Orders = Resides IB computers or Globex computers?

Limit Orders = Resides on IB computers or Globex computers?

I would appreciate some detailed answers to the above questions.

Thank you for your time.
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IB's RESPONSE:

True, GLOBEX does only accept limit orders.

Market orders sent are "simulated" as a limit order, through the price being displayed on the bid or the ask. For example, a simulated sell order @ 800 when the bid is 805 would simulate a market order.

Stops and stop limits are held on our system for Globex orders until they are elected. Upon election, a limit order is transmitted to the exchange. The ACE (Chicago Board of Trade) does accept stop orders, therefore, stops directed to that exchange are held and elected at ACE.

All of the information about the types of orders that are accepted at particular exchanges is located on this page http://www.interactivebrokers.com/html/retailAcc
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Now I'd like to open this up to some discussion on this issue and see what everyone else thinks? Did you believe as I had that after I submited my order I could immediately submit a stop order and be safe from IB's systems going down?
 
not really. i gave up trying to be 100 % protected from losses due to system errors about a year ago. personally i do not believe it is possible despite any ones claims ( by the way: IB is my current and favorite broker) and as such my particular trading style just factors this risk into the formula. kinda like accepting there will always be drunk drivers on the road no mater what measures are taken.
 
Originally posted by C. Coffee
I ran across another thread here mentioning IB's new implimentation of "globex stops". This is something that I really liked initially. After doing some fact finding I've come to the conclusion that it is not what it appears to be. At least it don't work the way I had wanted it to. The following is a message I posted on the IB msg boards and below is the response I got.



IB's RESPONSE:



Now I'd like to open this up to some discussion on this issue and see what everyone else thinks? Did you believe as I had that after I submited my order I could immediately submit a stop order and be safe from IB's systems going down?
More...


IB is setting up globex held stops. I think they are waiting for the new CME connectivity to be rolled out in Aug/Sept though.
 
Originally posted by Cdntrader



IB is setting up globex held stops. I think they are waiting for the new CME connectivity to be rolled out in Aug/Sept though.
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Cdntrader,

Thanks for the info. Where did you hear about this at? Do you have any links or other information to back this up?

I'm surprised I didn't get more replies than this. I see so many talking about globex stops with IB when in fact there is no such thing right now. All the IB stops are still held on IB's computers.

There also use to be a big debate where broker X would say that all their stop orders go to globex, while IB's stop orders reside on their computers. Now while this is still true in IB's case. Do any of the other brokers claims still stand? From the material I've read I would say no. Since Globex only allows limit orders, then how can any other broker claim their orders reside on globex?

I'm not saying I'm right about all these issues. I'm looking for further clarifications. If any of you guys can start pointing to specific information backing up or refuting my claims I would appreciate it.
 
Originally posted by C. Coffee


Cdntrader,

Thanks for the info. Where did you hear about this at? Do you have any links or other information to back this up?

I'm surprised I didn't get more replies than this. I see so many talking about globex stops with IB when in fact there is no such thing right now. All the IB stops are still held on IB's computers.

There also use to be a big debate where broker X would say that all their stop orders go to globex, while IB's stop orders reside on their computers. Now while this is still true in IB's case. Do any of the other brokers claims still stand? From the material I've read I would say no. Since Globex only allows limit orders, then how can any other broker claim their orders reside on globex?

I'm not saying I'm right about all these issues. I'm looking for further clarifications. If any of you guys can start pointing to specific information backing up or refuting my claims I would appreciate it.
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Just ask on the IB Forum:

IB Forum
http://www.interactivebrokers.com/cgi-bin/discus/discus.pl

No real need to discuss these IB issues here when you can get the answer from the horse's mouth;)
 
Cdntrader,

Thanks, I've been over there quite a bit lately. Did you have a specific post in mind over there? It's possible that I could have missed what I was looking for.

I'd appreciate any more info you can give regarding what you stated earlier. I have yet to read anything along those lines, so I'm curious to know what source you have.

Thanks
 
First of all, IB doesn't do it like my broker does. I only say this based on an email I got from IB stating that they won't execute after hours stops. My broker does, so there is obviously a difference.
As I understand it, globex converts all market and stop orders to limits 4 handles from the market. So if you want to buy at the market, and the price is 875.25, globex converts it to "buy at 879.25 limit." and with stops, for instance your "sell at 875.25 stop" is entered when 875.25 trades as "sell at 871.25 limit".
But getting back to IB, I've been stopped out enough overnight to know my stop orders are executed after hours. Why IB doesn't do it that way I don't know.
Oh yeah, there is always an argument going about under what condtitions your mkt or stop order wouldn't be filled based on the globex conversion. (Me? I've got enough risks to worry about already, so count me out of the discussion. I'll start worrying about not getting filled if it ever happens to me.)
 
- IB currently uses simulated Globex stops (inactive outside RTH !)
- IB will introduce native Globex stops (stop limit) , but no timeframe specified
- Conversion of MKT orders to LMT orders is done by IB (not by Globex)
 
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