Understanding Limit Orders, Stop Losses & Rising Buys
There are 3 types of Limits available through our service:
- Limit Order
- Stop Loss
- Rising Buy
We also offer a choice of periods that the limit will be monitored automatically by our system.
These periods are:
- Close of the next business day
- 30 Days
- 60 Days
- 90 Days
A limit is triggered if the last trade price falls within your specified range and when it is triggered the system will automatically attempt to execute the trade for you. To do this it carries out the following:
- Check if the limit is still valid ie. Look at your available balance and confirm that you have the cash or stock available to execute the order. If cash or stock is available it continues to the next step, if not it automatically fails the order and will no longer monitor it.
- Get a live quote from the market, in the same way as you would execute an ‘At Best’ order the system will ask the market for a ‘price in size’ for the trade you’re trying to carry out. If a price is received that falls within your limit then the trade is executed and completed. The limit would be marked as ‘Executed’ and no longer monitored. If a live market price is returned that is outside your range then the system continues to monitor the limit and attempt to execute it again when it triggers.
- Routed to Dealer: If a limit triggers more than 20 times and fails to get a live price back from the market within the range you specified the order is automatically routed to our dealing desk. One of our dealers will then attempt to manually get a price from the market and execute the trade if he can get a price within your range. The system can attempt to execute you order 20 times in a matter of seconds so it can quite quickly execute or end up routed to dealer for them to review.
- Why does this happen? Prices given by the market makers are usually for up to a set quantity for automatic online trade execution and a variety of reasons for this ‘online size’ varies. For example, stock in the ‘The Company plc’ may be trading at 100p to 105p and the market maker may set his automatic trading limit to 499 shares, this means that any buy order executing online for 499 shares or less should get a price of 105p or better. If an order is ‘over size’ ie. more than 499 shares, say 600 shares, then a quote may not be returned from the market markers automatically. When a dealer gets this order he can see how many shares the market maker is looking to buy which may be a much larger amount then the 499 he is willing to automatically trade in and the dealer will speak to him and the market maker may honour the price. Online size can be different to market size and unfortunately there is no way to tell what each market maker has their online size set to at any one time.
- If a limit is not fulfilled within the period you specify it Is marked as ‘Failed’ and no longer monitored.
Creating Stop losses and rising buy orders
Please note, when selecting an upper and lower trigger price for a Stop Loss or Rising Buy order on the order entry screen you must set these prices within a 15% range of each other. These are the price range figures that need to be entered in the 'Limit Price From' and 'Limit Price To' fields.
*If you decide to place a limit order or a stop order with us you accept that the conditions as our Terms of Business.