Schedule to sell a stock when it reaches a higher price (though not guarantee to sell it at that price)

Question

Suppose I have a stock with price $30. I want to trigger selling it as long as it reaches $35 (even though it might be executed at say $34.7). Is there such an option in any brokerage (such an option is not in Robinhood I think)?

I can't choose "stop sell" at $35, because that means it gets sold immediately since the current price is $30.

I think "limit sell" at $35 is not what I want, since if the stock reaches $35 but quickly falls below $35 then it doesn't get sold (there is no guaranteed execution for "limit sell" even if it reaches the price, I think. Correct me if I am wrong). My understanding is that the "limit sell" only sell it when the stock reaches $35 and somehow "stay above $35 for a while", but what I want is that as long as the price touches $35, it triggers a sell immediately even if it is executed at say $34.9.

(What I don't want to see is that the price stayed at $35 and then fall towards $29 in the next hour, but as a result the limit sell order at $35 is never executed!)

So is there any brokerage offering the option as I described above? It's like a reasonable "stop sell" at a higher price

Answer 1

A Conditional Order allows one to attach one or more stipulations that must be true before the order can be submitted.

Conditions can be any combination of price, time and volume along with operators such as equal to, greater than, or less than. Other conditions include margin cushion, percentage change.

For example, you could require that:

• XYZ >= $35

• volume > 10 mm

• or even a condition based on the price of a second security such as SPY > $275.

The more conditionals attached to an order, the harder it makes it for the trade to execute.

Such an order would only be possible if your broker offers it.

Answer 2

Limit orders are executed only if the market price reaches the limit price or goes higher. It is a little more complicated in fast moving markets, which you can read about here, Trade Execution (SEC).

Think of limit orders as something to be placed in anticipation of the market moving in your favor. Think of stop orders as something to limit your losses when the market moves against you. Both are orders to execute transactions for a specified number of shares at a specified price.

In your example, you own X shares of stock with current market price of $30. If you place a limit order to sell X shares at $35, the order will be executed at a price of $35 or better if the price reaches $35. There seems to be some confusion about the definition of a sell limit order in the comments. This is the definition from Investors dot gov a US government website (for transactions on US exchanges):

A sell limit order can only be executed at the limit price or higher.

One caveat about guaranteed execution: It is possible that you won't get your entire order executed, just a partial fill. It depends on the liquidity and volatility of the particular stock. If it is highly liquid, the volatility shouldn't be a problem. IF it is not so liquid, and it is volatile, then execution might be more difficult.

Answer 3

I'm not sure I understand your problem. A simple Limit Sale with 35 as limit sells whenever a sale is executed at 35 or over. But you don't want to sell there, you want to wait until an execution is slightly below 35 afterwards, and get less money? Why would you want to lose money, and what would you want to happen if the price stays over 35?

It sounds a bit as if you have a misconception about the 'price' - if the 'price' is over 35, why would you shares not have sold? The price is not something dictated by a third party, tha tells people what to trade for, but it is a record of the last trade. So if the price is 35 or above, a sale has happened at that price.

Answer 4

The way I would recommend is you set a condition to check which is the stock "touches" at least $35 during the day, then have that trigger an order which is a limit order but at a lower price. First let me explain something, suppose a stock is trading at $35 and is fairly steady (not much movement in the price). Even if you mistakingly put in a limit sell price of $25, it will very likely NOT sell at $25. It will very likely sell at the highest bid price (which is probably very close to $35). Ok now returning to your question... after you set the condition trigger (I think TD Ameritrade can do this), then simply have the associated limit sell order for something less such as $33 to give it time to sell. So for example, if the stock "touches" $35 briefly but then starts to slide $1 per minute after that down to say $30 then levels off, your trigger will have 2 minutes to sell the stock at a limit of $33, so you will likely get the highest bidder in that 2 minute slide, likely something around $34.90 or "ballpark".

Also worth mentioning is if you are selling a high volume stock, it should usually sell within a few seconds, sometimes even instantly. The chances of you picking the peak price that only holds for a few seconds and then quickly slides is slim.

Just to clarify, a condition check is not an order, it is only checking for some market condition, such as hitting $35. Once that condition is met, it will "fire" off an order which (in this example), will be your $33 limit order, or you could trigger a market order at whatever the current price is.

If you want to convince yourself what I am saying is true, buy 1 share of some cheap stock like $10, and then try to sell it for $5. You will see that instead it will sell close to $10 (whatever the highest bid price is). I think the only exception to this is if someone put in a bid for $5 before the other higher bidders. They might get it since they were queued up first. So if you do something like this, set your limit price reasonably close to your "trigger" price or do a market sell (at current market price). Chances are it wont nosedive from $35 to $30 in a few seconds (although I have seem some pretty fast dives).

Answer 5

What I don't want to see is that the price stayed at $35 and then fall towards $29 in the next hour, but as a result the limit sell order at $35 is never executed!

There is no way to guarantee your shares get sold at a specific price. There has to be sufficient demand at that price. Imagine this is the entire list of orders for shares of XYZ and for simplicity's sake envision Qty as the number of people each trying to trade one share.

If you own one share of XYZ and try to sell with a limit order at $35, it will be executed at $35 if you are in the first 100 orders, because order matching is done by price and time. If you weren't in the first 100 orders it wouldn't execute. You'd see price at $35 and then the price would drop lower. You could increase your odds of having your order filled by placing a limit order to sell right after buying the stock, but no way to guarantee that you're the first.

Limit orders ensure a buy won't happen above your specified price and that sales won't happen below your specified price, but they aren't guaranteed to fill just because other orders happened to fill at that price. Remember that the displayed market price is based on trades that have happened, which is not always what people are currently willing to pay.

Edit: I initially missed that your title states:

...though not guarantee to sell it at that price

With some platforms you can trigger orders if a certain price is hit. I don't believe Robinhood has conditional order types, with Think or Swim you can create a lot of custom orders. You'd be trying to trigger a trailing stop loss or trigger a market order. Definitely hunt for some tutorials on advanced/custom/conditional orders on your specific platform as some can be pretty overwhelming initially.

Answer 6

A limit order at $35 is very, very close to what you're asking for. For that matter, a limit order at $34.99 is also very, very close to what you're asking for.

Keep in mind that the stock market is a big auction. There are hundreds of people who are advertising that they will buy stock at one price or another (bid prices), and hundreds of people who are advertising that they will sell stock at one price or another (ask prices). If you post a limit sell order, then you're one of those hundreds of people selling, and the price you entered is your ask price.

Whenever a stock trade occurs, it always occurs at the highest bid price or the lowest ask price. "The price" of a stock is merely the most recent price at which a trade occurred.

What this means for you if you have a limit sell order at $35 is:

• If the price rises above $35, your order will be fully filled at $35. (This is because it's impossible for a trade to occur at a higher price than $35 as long as your limit order is open; the only way for the price to rise above $35 is for your order to get filled first.)
• If the price reaches $35 but does not rise above $35 (which is quite unlikely), then your order may be fully filled, partially filled, or not filled at all.

If you want guaranteed execution when the price reaches $35, consider placing a limit order at $34.99 instead. With such an order:

• If the price reaches $35, your order will be fully filled.
• If the price reaches $34.99 but does not reach $35 (which is quite unlikely), then your order may be fully filled, partially filled, or not filled at all.

The biggest downside of this is that, theoretically, your limit order might prevent the price from reaching $35! (Doesn't it make you feel powerful?) But since your order is just a "drop in the bucket" compared to everyone else's orders, this is extremely unlikely.

So, I think one or the other of these options will probably be close enough in practice. If you don't think so, I'd love to hear your reasons why.

By the way, to address this:

I think "limit sell" at $35 is not what I want, since if the stock reaches $35 but quickly falls below $35 then it doesn't get sold (there is no guaranteed execution for "limit sell" even if it reaches the price, I think. Correct me if I am wrong). My understanding is that the "limit sell" only sell it when the stock reaches $35 and somehow "stay above $35 for a while", but what I want is that as long as the price touches $35, it triggers a sell immediately even if it is executed at say $34.9.

That's not quite correct. For a limit sell order to execute, only two things must happen:

• Nobody wants to sell the stock for less than $35.
• Somebody wants to buy the stock for $35.

Once somebody chooses to buy the stock for $35, somebody's limit sell order will be filled, and it might be yours. There's no way for the stock price to rise above $35 until everybody's sell orders at $35 (including yours) have been filled.