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I am confused about my sell on stop quote good till cancelled order. It triggered at market open at 09.30.05 2/21/2018. I am now stopped out of B L D R at a price of 20.25. the order was put on 02/20/2018 after the market had opened and it was sell 100 @ 20.14 stop on quote for ticker BLDR Builders First Source,inc. O K now the question is how to I place a stop that will not get triggered in the overnight trading session but will trigger during regular daytime market hours this B L D R stock opened today 2/21/2018 at 20.48 and the low for now at least has been 20.25 and yesterdays close the previous close was 20.39. Apparently some time during the after hours trading on 2/20/2018 B L D R went at are below the 20.14 sell on stop quote and then triggered for immediate sell action at the open on 2/21/2018.

  • There's usually an option when you place the order, whether or not you want trades executed in the after-hours market. Though it's a little unclear to me if that's actually what happened since you said the trade was listed at 9:30:05. – Keith Feb 21 '18 at 19:12
  • i have 5 options to choose from when i click on order type its market,,, limit,,,stop on quote,,, stop limit on quote,,, and trailing stop on quote. – J L Booth Feb 21 '18 at 19:25
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    There's usually an additional fee for extended hours trades, so I'm thinking that your trade was executed in the regular market hours during opening trades. – Keith Feb 21 '18 at 19:31
  • O K Keith, even though i have never traded in any after hours markets only during the 8:30 to 3:00 central time market I am just trying to figure out how this trade stopped out when it never touched 20.14 during regular hours of trading It was 0.11 cents short of touching and if there is a way to avoid this for the next trade that i leave open over night. – J L Booth Feb 21 '18 at 19:49
  • Honestly, this is a question for your brokerage who executed the trade. I would GUESS that your trade was executed, during market hours, when the bid and ask price fell below your stop price. And that, for whatever reason, your transaction simply wasn't recorded on the daily range. It's rare, but it does happen for small trades. It could also have been an extended hours trade, but I doubt it; unless you previously enabled that type of trade for limit and stop orders. But your brokerage can look at the trade and tell you exactly what happened. No one here can from your limited description. – Keith Feb 21 '18 at 20:29
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It sounds like you may be confused as to how stop orders function, and you would be well advised to ensure that you have a complete grasp of their triggers and execution before using them in trades. This answer is intended to make a general point about the type of order you submitted and its ability to provide unwanted losses. It does not speculate as to what may have happened in your specific case, as another answer is already covering the timestamps of market prices and possible outcomes.

You'll typically see several types of stop (depending on your broker) including:

  • Stop
  • Trailing Stop
  • Stop Limit
  • Trailing Stop Limit
  • Adjustable Stop
  • Stop with Protection

Each of these has the same general idea of "if price reaches $x, do Y" but with tweaks to the 'if' and 'do' sections. Read up on each of them for a detailed explanation of how they work and what scenarios will best make use of them - that's beyond the scope of this question.

For an ordinary stop order, once the market price reaches or exceeds (assuming a sell order) the order will convert to a market order.

The is an important distinction and can cause havoc if your order is either left open overnight or you are trading a volatile instrument. In either case, a market order indicates that you are willing to accept market price for your instrument (whatever the immediately fillable best option is) even if that price is below your stop.

So, for instance, imagine an order book where there are plenty of offers to buy at $28 and a few offers at $29. You place a stop for a sell order at $30. Later, an offer is made to buy at $30 and it executes - the market price is now $30 and your order becomes a market order. Perhaps a few thousand other people have the same condition set as well (and some of them have better access to liquidity, such as brokers/traders). The $30 order is instantly filled and the $29 orders are also blown away. Your broker gets around to matching your market order a whole 1.9 seconds after the $30 signal went out, but now we're into the $28 buy orders. Since you have a market sell order, you're willing to sell at any price - the highest match in the order book is $28, so you're matched and you just sold your shares at $28 each despite your stop triggering on a $30 signal. You missed out on $2 per share!

You'll never have access to the prime matching so you will probably miss out on the immediate sub-second trades, but you don't have to settle for the scraps either. If you employed something like a stop limit order, you could set both a trigger ($30) and a limit price (also $30). This would mean that when the trigger is reached, you will place an limit order with an execution price of $30, your trade will not be matched for anything under $30 - but this does mean that if the trigger is touched and the price immediately drops, you might have a limit order just hanging in the books without a match, but that's of no concern at all compared to a potential screw-over by a bad market order.

tl;dr plan stop orders convert to market orders, which have an unpredictable fill price. Never place market orders unless you absolutely have to buy/sell right this second and you're willing to accept the potential of a minor loss in order to do so.

Edit: Something that hasn't been addressed is the concept of order books. These are the records that contain offers to buy and sell, and when there is a match between both types (a buy and sell for the same price) a trade is executed between the parties. Order books may be public (the NASDAQ order book, for example) or private. Private order books exist in what are known as 'dark pools' and provide no insight into their contents. These books have various uses (again outside the scope of this question) but their secrecy is of importance in this answer. If you submitted a market order and did not specify an exchange, your broker may choose to execute the order on any dark pools that they are members of - potentially matching you against a trade at a value different than what is reported by the markets. There is a lot to be said about dark pools (which will go unsaid in this answer) but yes, it's legal and yes, it does screw you over. Welcome to the world of being an individual investor. Add this to the list of reasons to not submit market orders.

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Here are the after hour trades for BLDR for yesterday 2/20/18, as reported by the NASDAQ:

16:00:04 $ 20.39 (401)

16:00:04 $ 20.39 (373)

16:00:04 $ 20.39 (100)

16:00:04 $ 20.39 (229)

16:00:11 $ 20.39 (2,074)

16:17:59 $ 20.39 (1,326)

17:00:00 $ 20.55 (4,308)

7:36:16 $ 20.55 (4,308) - Cancelled Trade

...

Here is the only pre-market trade for BLDR for 2/21/18:

07:00:00 $ 20.49 (78)

...

Time and sales for my broker shows the identical data but for all I know, they are just displaying NASDAQ's info.

The first trade of regular hours (2/21) was for 15,057 shares at $20.48. There were two trades at your price of $20.25 at 9:30:07 and 9:30:08 for 100 and 150 shares. BLDR then started rising.

No trades executed as low as your stop of $20.14 during after hours. While it's possible that all of this is bad data and your trade executed during after hours but wasn't reported, it's highly unlikely. If this data is accurate, the most likely reason is that since B/A spreads widen during after hours, the bid dropped to or below $20.14 and that triggered your stop. That may have persisted until the open and I'm guessing that it took 7-8 seconds for that triggered market order to be executed.

BLDR closed today (2/21) at $20.61 and at 6 PM EST, the quote is $16.48 x 21.90 !!!

The answer to all of this is a conversation with your broker. You mentioned above that you spoke with them and they indicated that BLDR did indeed go below 20.14. It doesn't appear that it traded there so it can only be the widened spread. I have no clue how different brokers handle stops during after hours so what I would want to know from them is what is their procedure for this? Would a bid of $16.48 trigger the stop? If so, is there another type of stop order that would avoid this?

Let us know what you find out.

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