Patriot Scientific

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Are limit and stop orders guaranteed?

Although a limit or order lets you specify a price limit, it doesn’t guarantee that your order will be executed. Orders at each price level are filled in a sequence determined by the rules of the various exchanges; therefore, there can be no assurance that all orders at a particular price limit (including yours) will be filled when that price is reached.

After the limit price is triggered, the security's price may continue to rise or fall. As a result, your order may or may not execute depending if the security's price in relation to your specified limit price is too great. Bear in mind that your order may execute at a price more or less than your specified limit price. Limit orders are also subject to the existence of a market for that security.

What are stop orders?

Stop orders are used to buy and sell after a stock has reached a certain price level. A buy stop order is placed above the current market price, and a sell stop order is placed below the current price (to protect a profit or limit a potential loss).

For listed securities, a stop order to buy becomes a market order when a trade occurs at or above the stop price. A stop order to sell becomes a market order when a trade in the security occurs at or below the stop price.

For over the counter (OTC) securities, a stop limit order to buy becomes a limit order, and a stop loss order to buy becomes a market order, when the stock is offered (National Best Offer quotation) at or higher than the specified stop price. A stop limit order to sell becomes a limit order, and a stop loss order to sell becomes a market order, when the stock is bid (National Best Bid quotation) at or lower than the specified stop price. Note, however, that some market makers may apply the guidelines for listed security stop orders to OTC securities. Further information regarding specific transactions is available upon written request.

Stop orders are not always accepted. The specialists on the various exchanges and market makers have the right to refuse stop orders under certain market conditions. Not all securities are eligible for stop orders.

On open limit orders to buy and open stop limit orders to sell listed stocks, the limit price is automatically reduced on the "ex-dividend" date by approximately the amount of the upcoming dividend, unless you specify the do not reduce condition when you place the order.

How are stop limit orders executed and filled?

Company news or market conditions which significantly affect the price of a security could prevent a stop limit order from being executed if the price of the security moves through your stop limit price.

For example, a stock is quoted at 85 Bid and 85.75 Ask. A sell stop limit order for a listed security placed at 83 is triggered at 83, at which point the order becomes a limit order. The stock would have to trade at 83 again for the sell stop limit order to be considered for execution at 83 or better. If the trigger price of 83 is reached, but the stock price continues to fall below 83, the order is not considered for execution.

Like any limit order, a stop limit order may be filled in whole, in part, or not at all, depending on the number of shares available for sale or purchase at the time. The specialists on the various exchanges and market makers have the right to refuse the orders under certain market conditions. Not all securities are eligible for stop orders.

A stop limit order automatically becomes a limit order when the stop limit price is reached. Like any limit order, a stop limit order may be filled in whole, in part, or not at all, depending on the number of shares available for sale or purchase at the time.

Is the stop price guaranteed for stop loss orders?

No. Company news or market conditions which significantly affect the price of a security could result in the execution of a stop loss order at a price dramatically different from your stop loss price.

For example, a stock is quoted at 85 Bid and 85.75 Ask. A sell stop loss order for a listed security placed at 83 is triggered at 83, at which point the order becomes a market order. The market order is filled at the next available price(s), which could be lower than 83.

What are the guidelines for trailing stop orders?

Trailing stop loss and limit orders are available on all listed and OTC securities. For listed securities, the trigger is based off the last trade, regardless of whether it is a buy or a sell order. For OTC securities, the trigger is based off the bid for a sell and the ask for a buy. You can enter trailing stop orders as either day or good ‘til canceled.

https://scs.fidelity.com/webxpress/help/topics/learn_order_types_conditions.shtml

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