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August 17, 2007

Advanced Orders Guide

Filed under: Uncategorized — manoftoday @ 6:05 am

Create a Bracket Order

Bracket orders are designed to limit your loss and lock in a profit by “bracketing” an order with two opposite-side orders.

A BUY order is bracketed by a high-side sell limit order and a low-side sell stop (or stop-limit) order.

A SELL order is bracketed by a high-side buy stop (or stop-limit) order and a low side buy limit order.

The order quantity for the bracketing orders is the same as that of the original order. By default, the amount off the current price to which a bracket order is set is 1.0. This offset amount can be manually changed on the order management line for a specific order, or you can modify the default offset amount using the Default Order Settings box.

In addition, if you display the OCA Group field on your order line, you will see that the two child bracket orders are automatically put into an OCA group. This means that when one of the orders executes, the other will automatically be cancelled.

Note that if you attach a bracket to a working order, you will need to transmit the child orders manually. However, the system does recognize that the parent and child orders are designed to work dependently, which you can see by the matching values in the Trailing Key field if you display this field on your order line. If you attach a bracket to a working order and modify the parent, when you re-transmit the parent order the children are then transmitted automatically.

To create a Bracket order

  1. Click the “Ask” or “Bid” price of an asset to create an Order Management line.

      • Click the Ask Price to create a Buy order.

      • Click the Bid Price to create a Sell order.

  1. 2.  On the right-click menu, select Attach and then select Bracket Orders.

  2. 3.  Verify that the order parameters are correct.

  3. 4.  Transmit the order.

NOTE: The “bracketing” or “child” orders are not transmitted until the original or “parent” order has executed.

 

 

Create a Trailing Stop Order

A trailing stop sell order sets the initial stop price at a fixed amount below the market price. As the market price rises, the stop price rises by the trailing amount, but if the stock price falls, the stop price remains the same. When the stop price is hit, a market order is submitted. Reverse this for a buy trailing stop order. This strategy may allow an investor to limit the maximum possible loss without limiting possible gain.

“Buy” trailing stop orders are the mirror image of sell trailing stop orders, and are used in falling markets.

NOTE: We do not recommend using trailing stop orders, as there is no guarantee that your order will be filled at or near the designated stop price, which is especially dangerous in rapidly rising or falling markets. In addition, trailing stop orders will accentuate volatility in rough markets.

To enter a trailing stop order

  1. Click in the Ask Price to initiate a BUY order, or the Bid Price to initiate a SELL order.

  2. Click in the Type field and select TRAIL.

  3. Enter values in the following fields:

    1. Aux Price (Trailing Amt) field. Use the dropdown to choose Amt or %. The trailing percent is calculated off the current best bid/ask.

    2. Limit Price – this value defaults to the current best bid/ask. The limit price will move with the trailing stop price based on the delta between the two prices (initial stop price – initial limit price = limit delta). If the limit price and stop price are equivalent, they will move together with a zero delta.

    3. Stop Price – This field is optional. By default, the workstation calculates the initial stop price using: market price – trailing amount(for sell order).  You can modify the stop price, but if it is lower than the calculated value, it will be discarded when the order is submitted. Note that the value you enter may display in the Stop Price field even if it is not used. { I think, If it is buy order, stop price=market price + trailing amount  }

    1. To transmit the order, click the red “T” in the Transmit field or the Transmit icon on the trading toolbar.

 

 

Create an Auto Trailing Stop Order

You can attach a trailing stop order to a limit order. The attached stop order is automatically activated when the limit order is filled.

To attach a trailing stop to a limit order

  1. create an limit order and Right-click on a limit order.

  2. Select Attach and then select Auto Trailing Stop.

    • To modify the trailing amount, use the Aux. Price field.

    • To modify the stop trigger method, right-click on the attached trailing stop order and select Modify and then select Trigger Method.

    • The initial stop price is calculated using the (parent order limit + trail amount) for Buy orders, and the (parent order limit – trail amount) for Sell orders. To modify the initial stop price, display the Stop Price field by right-clicking in the column headers and selecting Customize Layout. From the Order Row list check Stop Price. Note that the value you enter may be displayed in the Stop Price field even if it is not used.

  1. transmit the limit order in fisrt step. When the limit order executes, the trailing stop order is submitted.

 

Create a Stop Limit Order

A Sell Stop order is always placed below the current market price of the security or commodity. It is typically used to limit a loss or protect a profit on a long stock position. A Buy Stop order is always placed above the current market price. It is typically used to limit a loss or help protect a profit on a short sale

A BUY order is Current Market Price < Stop price < Limit Price.

A SELL order is Current Market price>Stop price > Limit price.

You can attach a trailing stop order to a limit order. The attached stop order is automatically activated when the limit order is filled.

Link to User’s Guide

http://www.interactivebrokers.com/en/trading/orderTypesMatrix.php

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