Conditional Trailing Stop Limit BUY Orders?

[Waffles]

Good Day,

Is anyone knowledgeable on “Conditional Trailing Stop Limit Buy Orders”? I successfully tried this yesterday but I also learned from this trade that the limit is defined by the low-variable that can be specified as the Last-Price but its high-variable for comparison can only be the ASK-Price. I consider the Ask-Price not to be as stable as the Last-Price. I’d rather see the previous Lowest Last-Price compared to the current Last-Price for the Limit differential.

Is there a good book that step thoroughly through these specific details and how to properly use them to your advantage?

I have found that most web sites talk about selling but not buying with trailing orders. Further, they only provide a dictionary type of description with zero examples for buying with thse order types.

Waffles

 

[Rhody Trader]

I'm a little fuzzy on what you're talking about here. Can you provide an example?

 

[Waffles]

I'm a little fuzzy on what you're talking about here. Can you provide an example?

Good Day John,

I may misunderstand how a multi-conditional buy works with a trailing stop limit. Here is how I do it (or at least think it works).

I want to place an efficient order that will follow a dropping price and will only buy when the price starts to rise by a minimum amount. I thought that a trailing stop limit used the last price for its limit testing (differential checking) but I found that Fidelity compares the lowest Last-Price (since triggering the trailing stop limit order) to the current Ask-Price. If this amount is greater than the limit amount (In the case below $1.20) it then triggers a purchase.

Yesterday, I experimented with training money on a conditional trailing stop limit for a stock. Unfortunately there are plenty of places to make mistakes with this type of order.

Here is an example of how I would place an order for Monday with Fidelity. Nothing happens unless the stock value drops.

A: If these criteria are met...
Symbol XYZ
Description PROSHARES
Trigger Last
Direction less than or equal to
Amount $83.80
Time in Force Good 'til Canceled


B: Then these criteria are met...
Symbol XYZ
Description PROSHARES
Trigger Last
Direction less than
Amount $83.69
Time in Force Good 'til Canceled


...place this order
Account XXXXXXXXX
Symbol XYZ
Description PROSHARES
Action Buy
Quantity 1 Shares
Order Type Trailing Stop Limit at $84.89
Trail Amount $1.20 Based on Last
Time in Force Good 'til Canceled
Conditions None
Trade Type Cash

Estimated Order Value: $84.89
Estimated Commission: $0.00
Estimated Order Value (including commission): $84.89

This is only for training and testing on my part. I believe that the above order would buy at a maximum of $84.49 but would buy for less if the price drops lower than $83.69. Having a limit means that it may not be successful if the price jumps past my limit. But, it does allow me to safely trade at treacherous times. I have read and seen random wild numbers take market orders especially during the first and last thirty minutes.

Kind Regards,
Waffles

 

[Waffles]

Please see # 7 below . . .

 

[new_trader]

Good Day John,

I’ve made this as clear as mud.


Basically, what is not described in any documentation that I have found is that when you base your limit on Last Price this is not compared to subsequent Last Price to triger the limit. Instead the lowest Last Price is compared to the current ASK Price to trigger the limit. Sometimes the ASK Price is abnormally higher that the current pricing causing a trade trigger not as you planned. This could be avoided if they compared the lowest Last Price to the current Last Price to trigger the limit.

I see that I am making a case as to why you should not use complex trades to enter the market for long term holdings.

I still see some “possible” advantages but they are unproven at this time.

Waffles

Waffles, you are waffling. I don't know who you are referring to when you say 'they'. 'They' don't compare anything to trigger a limit order. The market price is made up of the current Ask and current Bid price combined; the Last price is HISTORY because it is a trade that has already happened. A limit order is used if you want to secure a certain price or better and will only be triggered when the market trades through the price you specify. A Stop/limit order is an order that becomes a limit order once the market hits the stop price you specify.

 

[Waffles]

Please see # 7 below . . .

 

[Waffles]

Good Day,

Does anyone know where I can find the following documented? The Fidelity Representative said that these may be a NYSE or NASDAQ rules.

I spoke to Fidelity again and they assured me of the following for Trailing stop limit ($) orders.

1) Trailing stop limit ($) for buying compares lowest LASTPRICE, since the order was placed (if LASTPRICE is chosen for the “Based On” factor), to the current ASKPRICE to see if the limit has been tripped.

2) Trailing stop limit ($) for selling compares Highest LASTPRICE, since the order was placed (if LASTPRICE is chosen for the “Based On” factor), to the current BIDPRICE to see if the limit has been tripped.

Kind Regards,
Waffles