I once lost a great deal of money using a market order at the open. I'm too disgusted to check, but I probably bought Informix at its millenium high. It dropped with cement weights before I knew (8 minutes) that I was filled. Datek charged the commission because 100 of some 1k+ shares was filled within 30 seconds. The second two lots took much longer. I complained about the commission, not the loss.
By the time I knew I owned the rest of the shares, my long value had dropped four points.
We both learned the hard way: do not use market orders at the open.
Datek is not responsible for losses we incur in learning this lesson. This could have happened with any broker. Eight minutes is not an unreasonable amount of time to get a fill for a 9:30 AM order. That's just reality. (It is unreasonable to charge a commission on a minimum of one share of an order broken into three parts when I ordered 1k+ shares, not fewer, not more.)
Do not use market orders at all, unless you are willing to buy at the high or sell at the low of the day. Your broker (Datek or otherwise) might be able to stem your loss, but that will only be luck. Brokers do not owe us good "at market" fills, we are in luck if we get them.
I do know people who sell "at market" into a rising price: this seems like an acceptable strategy to me, but I don't have any experience with it.
And yes, I think Datek has its weaknesses. Fred is dead on: use brokers as tools, and use the right tool for the job. In a stock suddenly moving at break-neck, I use Datek (and even then, often do not get my limit and cancel the order). For a market-open limit order, I use Regal. The price improvement is not as good, but the customer service is absolutely excellent.
A recent good experience with Datek and a lesson to anyone who uses 32nds... The other day, I placed a stop loss on a long stock at X+21/32. Datek sent the order to NASDAQ and Datek's software rounded the order up to the next X+11/16. I was stopped out even though the bid did not drop to X+21/32 or lower.
I politely explained to Datek's representative that the situation was unacceptable. They represented my stop loss in 32nds, but sent it to NASDAQ in 1/16ths. The fact that NASDAQ does not have to honor 32nds does not mitigate Datek's representation to me that I would not be stopped out at the next highest 16th.
Datek agreed and "broke the trade." I was once again long and Datek took the hit. By the time I owned the stock again, I had lost the "opportunity value" of over 1 point. But the net result was being long on a stock that was, the day before, a net loss. Instead, I sold at a net gain.
So, Datek did a good job of (I must emphasize) politely eating their misrepresentation.
Lesson 1: Do not place market orders with any broker unless you're willing to get the worst trade of the day.
Lesson 2: Datek's definition of a "guaranteed marketable fill" is meaningless: they can fill one share by 9:31 AM and the rest at 3:59 PM and refuse to honor the guarantee.
Lesson 3: Do not place NASDAQ stop losses in increments of less than 16ths, regardless of what the Datek screen says about confirming a stop in 32nds.
Lesson 4: Datek is improving in customer service and fixing errors.
Regards,
Caroline |
