glider
59 posts
msg #43654
- Ignore glider |
5/12/2006 2:25:36 AM
I sometimes put in an overnight buy or sell for a stock. The prices can be way out of whack. For example, a stock closed at $2.30, but the ask is $11. There are many examples like this. Is it safe to put in an overnight buy in this case. I know they correct themselves at open but I'm wondering if anyone ever got caught paying an exorbitant price in such a situation.
Thanks,
Glider
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heyen
124 posts
msg #43655
- Ignore heyen |
5/12/2006 2:42:01 AM
sure, if you place a market order price might be a little hefty.
in pre and aftermarket always use limit orders!
if a price is way out of scope (like more than 100% above close) and there is no volume - your broker might bust a trade to protect you. but trading in pre and after market is usually very illiquid and therefore something risky.
so just place limit orders GTC at your desired price.
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glider
59 posts
msg #43660
- Ignore glider |
5/12/2006 10:12:13 AM
heyen,
Thanks for your comments. That's where I'm a little confused. I'm putting my order in pre-market to trade at the open. At least that's my intention. I don't want to trade pre-market. But there's no OPEN choice when I put the trade in the night before, only a MARKET choice. I've done it a few times and even though the bid/ask prices have been skewed overnight, I've always got the proper opening price. Just wondering if it's ever possible that it would go through at the inflated price.
Thanks,
glider
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JohnyYuma
60 posts
msg #43663
- Ignore JohnyYuma |
5/12/2006 10:47:34 AM
Glider
There is a possibility, albeit remote, that your Market Order entered previous night may get filled at a price deterimental to you if your broker or the MM wants to stick it to you
therefore
Although I never enter this type of order, Interactive Brokers has a functionality whereby you can specify the order to be at Limit Marker Open - i.e. you can specify a limt and if the regular open is within that limit, your order will get filled at the Open, otherwise not - this way you are safe (althoug you run the risk of not getting your oder filled if the open is couple of cents away from your limit) - you have to review the trade-off
As far as Pre-Market or After Market orders are concerned, there is a rule (don't know if it SEC/Exchange/or Broker enforced but you can only enter limit orders)
Hope this helps
Thanks
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heyen
124 posts
msg #43664
- Ignore heyen |
5/12/2006 10:50:52 AM
Glider,
please check your trading software. There is somewhere an option for orders Market on Open and Market on Close. Otherwise just place a Market order for regular trading hours only. But illiquid stocks have fluctuous prices on opens. This can be good or bad. I'm seeing spreads of up to $ .15 per share at $2 or $3. Depending on your strategy and time it might be safer to work with Limit orders.
Thomas
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heyen
124 posts
msg #43665
- Ignore heyen |
5/12/2006 10:53:19 AM
Well, JohnyYuma was faster in typing... (and thinking too?)
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glider
59 posts
msg #43678
- Ignore glider |
5/12/2006 4:31:44 PM
Thank you both for your comments.
Speaking of interactive brokers, I just opened an account with them. Waiting for the funds to be accepted. I like the flexibility & choices they offer for trading. I think it may solve this problem.
A really good example of the problem is the following:
Last night I put in a buy on Etrade for a stock which closed at $2.30. The bid was tiny and the ask was over $11. It executed at very close to the open but it's scary. I did a test buy on Ameritrade and the same bid/ask was quoted. The difference between both companies was that Etrade showed the total cost of the trade was the number of shares X close price. Ameritrade's total cost was number of shares X inflated ask price, about five times as much.
Glider
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