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Suppose I place a stop limit sell order at $10 (limit set at $9) for a stock that trades atm at $15. Will my order be visible on the open market immediately or only after it becomes a limit order (when the stock price on the open market reaches the $10 mark) ?

Same question for the stop order.

Update: If the stop order is not visible before the stop price is reached, is there anything legally preventing the brokerage firms/banks in sharing with third-parties their clients stop orders before they become market/limit orders ? I think this information could be used by short sellers (when they want to cover) and would be against the interest of longs.

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From the non-authoritative Investopedia page:

A stop-limit order will be executed at a specified price, or better, after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better.

So once the stop price has been breached, your limit order is placed and will be on the order books as a $9 ask.

For a vanilla stop order, a market order will be placed and will be filled using the highest active bid(s).

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  • That part is clear. But is the stop order visible in the order book before the stop price is reached ?
    – Eugen
    Jun 16 '17 at 7:57
  • If you mean in the bid/ask order list then no - only when the limit order is created. It's obviously in the broker's order system, though.
    – D Stanley
    Jun 19 '17 at 13:30
  • So you mean, until the stop order becomes a market order it is not visible outside the broker's system ?
    – Eugen
    Jun 19 '17 at 20:36
  • @Eugen until the stop order becomes a market order or a limit order, I do not think so. It's possible the exchange has that information somewhere, but it will not be in the bid/ask order tree until it becomes an actual market or limit order.
    – D Stanley
    Jun 19 '17 at 20:48
  • I've recently encountered the concept of "Server Order". A stop order is a server order (meaning it is only stored on the broker's system) until it is triggered so it is not visible on the exchange.
    – Eugen
    Sep 24 '17 at 14:46
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I've found a very clear answer to this question in this post: Market Order vs. Limit Order vs. Stop Order: What’s the Difference

The order that is immediately executed is the Market Order.

When we want to buy or sell a more convenient price, instead, we use a Limit Order.

Limit Orders are sent to the "market", but are not executed by it until the price reaches the "limit" level.

Those orders are publicly visible because they are actually sent to the market and so the contribute to "move" the ask/bid columns.

Because they can’t be executed immediately, limits are held on the order book, which is the electronic log of buy and sell orders for a particular stock that cannot be executed at the current price.

Wikipedia defines the Order Book as

the list of orders (manual or electronic) that a trading venue (in particular stock exchanges) uses to record the interest of buyers and sellers in a particular financial instrument.

A matching engine uses the book to determine which orders can be fully or partially executed.

PLEASE, NOTE that here, "Stock Exchange" doesn't indicate the exchanges that we use to trade and to which we deposit our funds to use for trading, but, instead, indicates the "bourse".

Continuing with the explanation of a Limit Order

The order book also shows the market makers in the stock and their market size, or the number of shares they have available at that price.

The number of shares (and their prices) that are offered for sale by market makers make up the ask side of the book, while the number of shares (and prices at which) market makers will buy is the bid side.

The total amount of shares that are available for purchase and sale as shown by the order books is the depth of market for that stock.

The Stop Orders, instead,

are also known as “stop loss” orders.

This alternative name comes from their role in the protection of an investor’s stock position – be it long or short.

A stop order has two parts: a trigger (or election) and an execution.

This is not a "real" order, but, instead, is an instruction that is given to the broker to create a Market Order (in case of use of a "simple" Stop Order) or a Limit Order (in case of use of a "Stop Limit Order") when the trigger is reached.

As Stop Orders are not actually sent to the market, they cannot be seen by it until the trigger is reached and a "real" Market Order or "Limit Order" is created.

The article is full of examples that helped me to better understand how the various types of orders work after a lot of searches and reading to try to understand the use cases for each type of order.

Now, finally, I have all (almost) clear: I only need to better metabolize them.

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