Sorry Gary, I believe this information is not correct.
A stop is not possible on the nasdaq becuase there is no specialist. Therefore it is a stop limit order.
Nasdaq777,
Thanks for the information! I will run this by FIDO tomorrow. Stop limit. It becomes a market order when it hits the limit price. Got it! And thanks again.
Gary, stop orders are very possible on the Nasdaq. In fact, I was stopped in short on Ascend today at 37-1/2 (sorry, doesn't make me a bad guy; just following signals).
A specialist is not required for a stop order. It is a broker function, probably a floor broker on the NYSE and some computer equivalent on the Naz. In fact, if a specialist (on the NYSE) knew your stop that would not be good, since that specialist may be making a market in the stock. Stops are not visible to MM's; they try to figure out where they are, so they can hit them.
Now there are two types of stops: stop and stop limit. The previous post had incorrect information about this as well.
A stop order becomes a market order when your stop price is hit. Let's say you place a buy stop at 50, when the market is at 49. As soon as a single trade takes place at 50 your stop order becomes a market order at 50. It may get filled at 51, if the market is racing upward. You might get a lower fill too.
A stop limit order becomes a limit order when the stock trades through your stop price. Let's say a stock is trading at 49. You place a buy stop at 50, limit 49-1/2. The stock hits 50, proving to you that it has the momentum. You now have a limit order at 49-1/2, which may or may not get filled. It is a subtle maneuver that shows momentum but looks for a dip to buy.
I place these orders constantly on the Naz. Lombard/Discover allows them, eSchwab does not.
Good trading to all,
Harry |
