IB's stop limit orders & OCA

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o10maximus

I've never used their stops b4 b/c I heard they aren't too reliable. I'm wondering what the experience of others has been. I be trading NASD stocks only.

If I want to place a stop limit I'm assuming the election
price = the price i want the trade to trigger/become live, and the limit price = the price to execute the trade (or better). I would probably set at .05 -.10 difference between the election and limit price depending on the stock; is this correct?

Also if I have a stop limit in place, but I manually execute the order would I need to cancel the stop limit or does the OCA kick in automatically? If not what is the method to activate OCA? I don't see any options for OCA on my TWS.

Thanks for the help

Trade well!
 
I've had good luck with stops doing what they're supposed to do. But I'm new to IB, and I'd love to see some user comments on this. Good question.
 
Since no one else has replied I'll give it a shot. I haven't traded stocks at IB for a few months (into futures now), but I assume things are the same.

Your assumption is correct about the limit orders. Only thing to be aware of is on trading NASD stocks, the election price is triggered by the Bid on buy stops and the ASK on Sell stops. This forces you to make the spread between the election and the limit wider to account for the spread between the bid and ask. It's highly possible to not get filled if the spread is too tight. I believe NYSE and other exchanges are normal.

If you do a manual order, I believe you'll need to manually cancel the OCA order as well, since there isn't a connection between the two. It seems if you manually cancel you won't be pulling up a ticket and entering the OCA group name just to cancel the other order?

The stops became highly reliable last time I used them.

:)
 
The OCA feature is something you explicitly have to use. If you aren't using it then your not going to have any order automatically cancelled for you.

You won't find much on OCA without reading about it first in the IB TWS User Guide. The OCA feature requires that you expose the 'OCA group' field in your TWS layout and then use that field to label orders that you want linked together for OCA (use same name in that field for each order you want linked.) Then you must Transmit the Page which contains those OCA orders. Which for me means I create a page for the OCA that I want to construct and then once all the orders are created, have the same OCA group name, etc. then I transmit the page. (Specifically - I have no other orders on that page when I transmit the page unless I'm sure I want them to be transmitted as well.)

Don't rely on my info above about this feature however. Instead read about it in the IB user's guide. Go to the 'Index' tab and type in "OCA" and click on 'OCA' to learn all about it.

- David I
 
I don't have hard facts on this - it's just my observation/belief ... but I think I've preferred when trading NYSE stocks to use just a plan 'Stop' order and NOT use 'Stop Limit' order. Ignoring the risk that a 'Stop Limit' order may not provide you with a fill (which it very well might not) it seems to be my experience that I've gotten better fills on NYSE stocks buy using a 'Stop' order that turns into a market order once the stop it triggered. Sure I get the feeling of more 'control' if I program a 'stop limit' order however you have to think about what's a reasonable limit price in the case of a lot of movement going on as your stop is hit. You balance the desire to want your trade executed with the amount of slippage you are willing to give up to hopefully increase your chances of having your limit order be marketable in a timely fashion. Unfortunately it has seemed to me that my 'limit' order portion of the 'stop limit' order has almost always been executed at the 'limit' and by watching the time and sales I have sworn that it looks like my order is very slow to getting filled - sometimes it appears that the trading goes right by my entry and I'm actually filled as the stock price starts to reverse and come back to my limit. I don't like that. Whereas on my plain old 'stop' orders (remember I'm talking NYSE stocks here - plus these are my own personal beliefs/observations and I don't know how true they are) seem to execute much faster (understood since they are market vs. limit orders) and I'm usually very pleased with the fill (that the slippage hasn't been any worse and many times it's been better than I would have allowed for programming a stop-limit order.) Plus I have the guarantee that I'm getting filled which depending on how your using these orders might be very important.

Now I'm sure I'll run into a case or cases someday where I feel I was robbed and wish I had used a stop limit order but so far that hasn't been a problem (NYSE stocks remember.) Perhaps the NYSE stocks I happen to trade all have the characteristics of having good liquidity, volume and generally tight spreads. I'll allow for the potential that there NYSE stocks which might be more problematic and I've just been fortunate enough to not have dealt with those problems.

Would any one with more experience recommend differently? Please share your thoughts. I welcome them as well!

As for NASDAQ ....

Well I'm no expert but I would think that in an issue with high volume, liquidity and relatively tight spreads that either a stop or stop-limit would workout pretty good (except that with the stop-limit you are at risk for not getting filled and that may be a huge problem.)

For me the main question is primarily whether I need to be sure the order is filled (shares sold or bought) as in setting stop loss type of orders (when the trade goes bad or is wrong I want out) vs. entering a trade using a stop or stop-limit which sometimes I can be more carefree about whether this one particular trade is filled within my tolerance for slippage vs. letting it pass for the next trade (not chasing the trade.) On entering a trade I might be more inclined to use a 'stop-limit' order to keep my entry within the range I expect it to be especially if I fear that the stock would present me with excessive slippage by using a plain old 'stop' order (which becomes a market order.)

May be someone can articulate their thoughts better on this. I'd be interested in hearing from others on this.

It might be helpful that I'm thinking of swing and position trade entries and exits here when I give my thoughts above.

- David I
 
David,
like you I only use stop orders and not stop limit, I also only trade NYSE stocks and not NASDAQ, and also I swing trade over say 2 to 5 days and not day trade.

My experience has been really good with using IBs stops, I get a bit of slippage sometimes but also get price improvement sometimes too.

All in all I am very impressed with IB.
 
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