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Here's a real-world example:

  1. I had a position in a stock held overnight with a stop loss order at 45.20.
  2. Next day the stock opened at 45.60 and made a low of 45.50 within first 5 minutes of trading.
  3. However, my position was closed by broker at 45.18.
  4. Answering my questions, support explains that: "Looking at time and sales table for the stock there actually was a trade that happened at 45.18, which triggered my stop loss order. The chart for the stock does not display this price, because the trade volume was below 100 shares."

Is everything correct in this situation, i.e. a random trade of 1 share can happen at a basically random price, triggering my order and not being registered on the chart?

If you don't mind to elaborate, how frequently can this happen? What can I do to prevent this from happening?

Thank you!

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Typically this isn't a random order- having a small volume just means it's not showing on the chart, but it is a vlid price point. Same thing would've happened if it would've been a very large order that shows on the chart.

Consider also that this could have been the first one of many transactions that go far below your stop point - would you not have wanted it to be executed then, at this time, as it did? Would you expect the system to look into future and decide that this is a one time dip, and not sell; versus it is a crash, and sell?
Either way, the system cannot look in the future, so it has no way to know if a crash is coming, or if it was a short dip; therefore the instrcutions are executed as given - sell if any transfer happens below the limit.

To avoid that (or at least reduce the chance for it), you can either leave more distance (and risk a higher loss when it crashes), or trade higher volumes, so the short small dip won't execute your order; also, very liquid stocks will not show such small transaction dips.

  • Thanks for your answer, many good points! You are right in thinking that I did not enjoy being stopped out at a price that I do not see on the chart. But also I completely agree with you and I would definitely prefer to be executed correctly on whatever volume over being unprotected and exposed to possibility of much larger loss. My biggest surprise in this situation was the fact that not all 100% of trades are registered on the chart, unfortunately I did not know that. – rob0205 Jun 19 '17 at 18:52
  • That might depend on the chart provider you are using?!?!?! – Victor Jun 19 '17 at 20:47
  • I found that also surprising, but after thinking about it - some large shares have hundreds of transactions per second; it would be unrealistic to expect them all showing up. On the other hand, low-volume shares with a dozen transactions per day should show each one of them, even small volumes. I guess that is the decision of the chart maker, as Victor said. – Aganju Jun 19 '17 at 20:50
  • So, would nasdaq.com show all available data then? In my example (the stock is traded on NASDAQ), I would expect this page to show the correct low of the day, am I right? – rob0205 Jun 19 '17 at 22:41
  • I have never used that page; but if you click on 'historical' and then on the column header 'low', it explains that it only lists the lowest price during trading hours - maybe that's the reason. – Aganju Jun 20 '17 at 1:05

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