If I'm using IB to trade the QQQ's through island and I'm long at 45.50 and I want to place a stop at 45.30 can I use a stop order or does it have to be a stop limit order. My thinking is if I use a stop order once my stop is hit it becomes a market order and island does not accept market orders. Should I be using best or best ecn.
using stop orders with island
- Thread starter Carl J
- Start date
You know, I've never attempted to mark an IB Island order "Market" to see what happens so I can't answer that part of your question (though just for kicks I am going to try it to Monday cause I like knowing about the oddities)
When in control of TWS myself, I always route manually (and believe that I get better results that way), but I will say that when using stop flavor orders I would always use BEST routing. I would never want to rely on a stop that is specifically routed -- what if you are away from your computer or your computer goes down and the route that you chose for your stop also has technical difficulties? As most of us know, Island had problems with their matching engine last week and was unavailable system wide. I would sure hate to have a stop blown under those circumstances. BEST will route to an alternative in that situation.
JB
When in control of TWS myself, I always route manually (and believe that I get better results that way), but I will say that when using stop flavor orders I would always use BEST routing. I would never want to rely on a stop that is specifically routed -- what if you are away from your computer or your computer goes down and the route that you chose for your stop also has technical difficulties? As most of us know, Island had problems with their matching engine last week and was unavailable system wide. I would sure hate to have a stop blown under those circumstances. BEST will route to an alternative in that situation.
JB
Order Routing and stops are the reasons that I think its better to trade the Nasdaq e-mini than trade QQQ. AMEX stinks and I hate chasing ECN's around. I think your commision costs are lower as well (with the right broker) and futures have tax advantages over stock trading and no wash rule nonsense.
I also prefer to put in my stop order right after I'm filled. Keeps me from 2nd guessing and looking for reasons to stay in a trade when I should get out (an acknowledged flaw of mine).
I also prefer to put in my stop order right after I'm filled. Keeps me from 2nd guessing and looking for reasons to stay in a trade when I should get out (an acknowledged flaw of mine).
Sometimes ignorance is bliss. I place regular stop orders on ISLD using IB all the time. It appears to fill as if I put in a limit above/below market to ensure a fill (sometimes called a sweep).
With QQQ's (which is what I mostly trade on ISLD) I get filled at best bid/ask as far as I can tell (obviously paying the spread).
def
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for those exchanges that do not support market orders, IB simulates them with limit orders. Once triggered they work very well. However, there is a risk of getting filled at a horrible price and thus I would prefer to use a stop limit.
Say a large sell order takes out most of the book which triggers your stop. A market order will seek any bid at the exchange and if the book is thin you could get a horrible fill. You still can get a bad fill with a stop limit but at least you can control things a bit better.
Say a large sell order takes out most of the book which triggers your stop. A market order will seek any bid at the exchange and if the book is thin you could get a horrible fill. You still can get a bad fill with a stop limit but at least you can control things a bit better.
Personally I have always been confused by Def's point regarding potential "horrible" fills with a stop market and perhaps a stop limit is better. Isn't the primary point that our stop has been hit and the trade is no longer valid? And if so than our objective- our obligation as disciplined traders- is to close the trade is it not?
So how does a stop limit help us control things more? Should we just assume that it was a momentary thin market and why get screwed with a bad fill when we can just wait a few minutes and let the market stabalize and then cover the trade gone bad at a better price? Or better yet we can simply decide that since we did not get a good fill we can go ahead and change the daytrade into a swing trade, or god-forbid a long term investment.
I am not trying to be sarcastic. I am serious. I see posts on this all the time and I would like someone to explain the rationale on why one would use a stop limit over a stop market if the main point is that the stop has been hit and it is time to cover the trade.
So how does a stop limit help us control things more? Should we just assume that it was a momentary thin market and why get screwed with a bad fill when we can just wait a few minutes and let the market stabalize and then cover the trade gone bad at a better price? Or better yet we can simply decide that since we did not get a good fill we can go ahead and change the daytrade into a swing trade, or god-forbid a long term investment.
I am not trying to be sarcastic. I am serious. I see posts on this all the time and I would like someone to explain the rationale on why one would use a stop limit over a stop market if the main point is that the stop has been hit and it is time to cover the trade.
I have to agree wtih NIcodemus here. I use stops mostly to get out of trades gone bad. Since I mostly trade QQQ's on ISLD liquidity has pretty much ensured that I get a fill within 1 to 2 cents of what I expect. Often I get the bid/ask due to the depth of the book.
A nice combo is to use a profit target LIMIT with a stop loss STOP using OCA. That way I don't need to watch it all the time.