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Non-Tech : Fight The Power! -Your Broker Just Screwed U - Now What?
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To: AnnieO who wrote (109)12/8/1998 6:56:00 PM
From: Eric P  Read Replies (1) of 323
 
AnnieO:

First of all, the person who was buying at that price may have been other investors/traders, or the specialist (not market maker) of the exchange. There is no way to tell whether you should have been filled at 42, although I suspect you should have. Several points to consider:

1) Floor brokers and market makers all know that the highest concentration of buy/sell orders can be found at the even (i.e. no fraction) number. This is a widely known fact. When placing limit orders, your best bet will always be to place the order before the even number. For example, if a stock is trading at 44 1/2, a buy limit order should be placed at 44 1/16 (not 44). A sell limit order should be placed at 44 15/16 (not 45).

On a stop order, the procedure is reversed to prevent filling the order until after all of the even number executions are completed. A sell stop order should be placed at 43 15/16 and a buy stop should be placed at 45 1/16. This will help avoid the frequent problem of getting stopped out when the order just touches down to your stop price of 44, then goes back up.

2) Find out which exchange is being used to execute your order. CPQ is a NYSE stock, however, you may be surprised to out that the bulk of the orders that discount brokers execute in NYSE stocks occur in the regional exchanges (due to lower fees). I don't know for certain whether this causes any disadvantage for you, but I always place my orders for "NYSE Only". There is no extra charge, and you can be more certain that your order is being handled properly.

-Eric
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