Question about buy stop orders

[smiso24]

I have an account with Scottrade and notice they require buy stop orders placed after the market close to be at least 10 cents above the closing trade. Similarly, they require buy stop orders placed during market hours to be at least 10 cents above the best offer. Why do they do this? I notice E-trade does this too. Are there any brokerages that let you place a buy stop order just one cent above the closing price?

Thanks.

 

[nine]

Interactive Brokers will let you make your own choices ... right on top of the bid or offer if you want.

I suspect that the others do it in part to protect you from yourself (disappointment and errors) but also to protect themselves from the inquiries and complaints when overly close stops get hit.

 

[jerry828]

I don't have any records on Scottrade, but it also might have something to do with margin levels, i.e. the liability they face towards the exchange due to margin levels. What kind of margins are they offering Smiso?
All brokers I have been with lets u decide stop levels yourself (as long as you don't breach the limits).

 

[DayTradingGuide]

I have an account with Scottrade and notice they require buy stop orders placed after the market close to be at least 10 cents above the closing trade. Similarly, they require buy stop orders placed during market hours to be at least 10 cents above the best offer. Why do they do this? I notice E-trade does this too. Are there any brokerages that let you place a buy stop order just one cent above the closing price?

Scottrade and E-trade are traditional brokerages that are targeted at the general public rather than professional traders (regardless of what they say on their web sites).

If you want to become a professional trader (day, swing, or position) you will need to use a direct access brokerage, which means that your orders are routed directly to the exchanges. Direct access brokerages will not place any restrictions upon your orders, so you will be able to place your stop orders at whatever price you want.

It is not yet a complete list, but my profiles of some of the most popular direct access brokerages (such as Interactive Brokers, and TradeStation) might be able to help you choose a new brokerage.

Adam Milton