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Lets assume MSFT is at 110 today and there is some negative sentiment in the market (say due to some additional tariffs on US by China).

A safe assumption is that MSFT may go down today (...assuming there are no good news in MSFT or TECH. It may go down tomorrow too but I am taking my chances to buy a small position... say 25 shares).

However I would want this to execute at the best possible price today. (...at least try to :D)

To achieve this, I want the opposite of a "trailing stop". i.e. I set the stop as say 0.5%. As the stock goes down, my target buy price continues going down and during a reversal... if it comes up more than 0.5%, I want to place a limit/market order and accumulate the shares at that price.

Is there some kind of order that can help me achieve this? It seems to be a basic requirement but unfortunately I am lost.

FYI I am using Interactive Brokers and their tech support was of no help regarding this query.

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It's essentially a "trailing stop buy" order - buy if the price gets to 0.5% above its lowest price.

I am not certain whether your broker supports that type of order or not. It seems like it does from their web site:

A "Buy" trailing stop limit order is the mirror image of a sell trailing stop limit, and is generally used in falling markets.

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To achieve this, I want the opposite of a "trailing stop". i.e. I set the stop as say 0.5%. As the stock goes down, my target buy price continues going down and during a reversal... if it comes up more than 0.5%, I want to place a limit/market order and accumulate the shares at that price.

If MSFT is dropping, how can any traditional Conditional algo order know where the bottom is? That is, unless it can accept multiple IF/THEN formulas. I'm not familiar with how complex IB's Conditional formulas can be so I dunno. And if Tech Support doesn't know then you may be SOL. Look at their Algo page and see if any can be adapted.

If you can't find an order type that supports this approach then perhaps connecting Excel to your IB platform via a DDE connection might suffice. It would take a bit of effort but it can be done with some nested formulas. Perhaps something along the lines of:

Current price < Close - X (price has dropped by at least X)

Current Price > Low + .5% * Low (MSFT has bounced)

One of the problems is that .5% of $105 is a mere 53 cents and will be hit easily during daily trading. Your order would have been filled this morning at about $106 and MSFT is now under $105. It would have also been filled at about $110 on Thursday with no bounce while on the way to $106 Friday. There's no guarantee that this type of order will get you a fill anywhere near the low of the day. Have you tested/observed this over a period of time?

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  • Thanks for the insight. Yes, I do understand that there is no algo that can predict the bottom (atleast at this point). Objective was to get some shares at good prices (for that particular day) and to look at it from a broader perspective and sell them in say 2-3 weeks when the prices are back up. (MSFT history shows prices have been rising for a long time) Also, The trailing limit will be modified based on MSFT price action. 0.5% was just to put my point out. The Excel DDE connection was new info for me and will have a look. Thanks! – Thomas Koipuram Jul 30 '18 at 18:11
  • YW. The DDE/Excel is really useful if you have number crunching objectives and you want them in real time. I have used it a lot for keeping track of the component values when Pairs trading as well as for tallying P&L as well as total delta when delta neutral trading. You can also set alarms in Excel on your own crafted criteria. Let Tech Support walk you through installation because the online Help Indexes will have you pulling your hair out. – Bob Baerker Jul 30 '18 at 18:20

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