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Strategies & Market Trends : From the Trading Desk

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To: steve goldman who wrote (3848)	11/20/1998 12:54:00 PM
From: David Penfield	Read Replies (1) of 4969

Another discount broker horror story... Steve (and thread) - I recently had a bad experience with a stop order on a volatile NASDAQ stock (BFLY on Thursday morning) and am not sure whether my broker is at fault or not. Thursday morning BFLY gapped big time and flew around all morning. At one point I decided to lock in profits with a stop sell order at 13 1/2. My broker's on line entry system (over the internet) took the order and eventually showed it as being "Placed" on the view orders screen. Some time later I noticed the stock trading at 13 1/8 and the order status was still "Placed". I called the broker and after what seemed like forever (stock now at 12 1/2) a broker came on and then called the Market Maker to see what was going on (stock now at 11 3/4). Finally he comes back to say (stock now at 11 1/8) that the Market Maker rejected the order because the bid was below the stop when they (the MM) received the order. (Evidently the bid dropped between the time their internet web site accepted the order and the time they submitted it to the MM.) The brokers said that the MM never gives an indication that a stop order is invalid and that they (the brokerage firm) are not at fault. I contend that they are acting as my agent in this transaction and should therefore make sure the order is valid after it is placed. Also by showing me that the order is "Placed" on the view orders screen they are indicating to me that it is indeed "Placed" and ready to be executed. I had 2000 shares so the loss (13 1/2 to 12 1/8) is $2750. Probably not enough to arbitrate, but enough to switch brokers. How are stops handled on NASDAQ stocks? Is this handling typical of discount brokers? How does Yamner handle stops? Thanks, David

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