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Registered User
Joined: 1/15/2005
Posts: 13
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I am absolutely new to stock trading. I have some simple questions about the types of trades. I do not do options or sell short. I am just getting up to speed on long positions. I plan on swing trading.
I am confused when trying place Stop Limit BUY order. Of course the only definition I can find uses terms like at a "certain price or better," but that really doesn't give me enough information.
This is what I was trying to do:
A Stock was staying at about 51.80 and I want to buy it when I thought it was going to make its move up. So I placed a stop limit order with a activation price of 51.87 and a limit price of 51.88 But the trade failed to execute several times. I called Ameritrade and the lady who helped me was very carefull to not give me any advice but the result was, we couldn't understand each other. I did understand that the trade was cancelled by ameritrade.
So now I am thinking that a Stop Limit BUY must have to be executed when the price crosses down over the price.
So can someone help me understand what it is exactly and why my trade didn't go through?
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Registered User
Joined: 2/15/2005
Posts: 5
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Stop-Limit Order
A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, the stop-limit order becomes a limit order to buy or to sell at a specified price.
The benefit of a stop-limit order is that the investor can control the price at which the trade will get executed. But, as with all limit orders, a stop-limit order may never get filled if the stock's price never reaches the specified limit price. This may happen especially in fast-moving markets where prices fluctuate wildly.
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Registered User
Joined: 1/15/2005
Posts: 13
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So for example;
I have been watching OMC.
So are the TODAY'S MARKS FOR OMC
HIGH- 88:53
LOW- 88.03
CLOSE- 88.48
Assuming it opens tomorrow below today's high. I want to buy shares tomorrow at todays high of 88.53 I don't want to buy it until it reaches yesterday's high, just to make sure it has momentum. But I want to get the best price- not too high above that- let's say 88.60
So it is my understanding that I can do this by placing a Stop Limit order to buy as follows;
BUY/SELL: Choose Buy
Quantity: # of shares
Symbol: OMC
Order Type:Stop Limit
Activation: 88.53
Limit: 88.60
Expiration: Day
This should purchase me all my shares at a price between 88.53 and 88.60, right? This assumes that the price doesn't move too fast upward to fill the order below my limit price. Or am I way of?. If I am wrong, then how can I place an order to at or above today's high,88.53 and limit it to buy at no higher price than 88.60
P.S. I would be satisfied with a partial fill. Will this allow for a partial fill?
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Registered User
Joined: 1/15/2005
Posts: 13
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OK I know that was the world's longest question, but anyone want to take a shot at it?
By the way Xander, thanks for your response. The reason I was confused is that Ameritrade seems to not want to fill my order when I do things like I outlined in previous post. They ended up cancelling it a couple times with no explanation and when I called, the girl answering my call didn't seem to really understand herself.
Finally they did it right today.
I think they screwed up before- not me. I think the execution there has been poor for me but I lack experience to be sure. anyone else have problems with Ameritrade. Some other company have better execution? I heard options express is good.
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Registered User
Joined: 2/26/2005
Posts: 3
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A problem you may have run in to, and not just with Ameritrade but anyone is, activating at $51.87 and limiting at $51.88, if it was going up or down, it may have gone right through that narrow range too quickly to do your trade. You may want to leave a little more room if you're serious about getting into or out of a stock. b
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Registered User
Joined: 1/15/2005
Posts: 13
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Thanks Billb2,
I see your point.
I guess the reason that I assumed that having the Stop so close to the Limit would be adaquate was because the Ameritrade explanation of Stop limit actually said the limit and Stop are usually the same. In fact, when you place a Stop limit order, it populates the Activation (Stop) feild automatically with the figure you put in the limit feild. I thought I was being liberal by changing it to a penny difference for room. Well I am learning. It is hard for me to know how much space I can comfortably put in there between Stop and Limit and expect to get in. I guess it would somewhat depend on the number of shares I plan to buy as well as how rapid the change is. It is an art isn't it?
Any tips are welcome.
Thank you and Xander for your help.
CT
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