NYSE joining Nasdaq in eliminating stop orders
Post# of 63692
Posted On: 11/18/2015 5:27:18 PM
NYSE joining Nasdaq in eliminating stop orders
A type of order traders use to protect against losses is being phased out, as stock exchanges seek to deal with the ramifications of huge intraday swings.
The New York Stock Exchange, in a statement, said it would no longer accept what are called stop orders, beginning Feb. 26, joining the Nasdaq NDAQ, +1.96% in barring them. Another order type called good-till-canceled also is being axed.
The NYSE, a unit of the InterncontinentalExchange ICE, +0.64% cited the risks that occur from such orders during volatile trading. A stop order could be triggered after a big downward move, but investors could be unhappy when the stock quickly recovers its value. Another risk is the stock falls much further than the level where the stop order was intended to be executed.
(Short sellers place stop orders in the opposite direction, buying if a stock exceeds a certain price.)
MarketWatch columnist Michael Sincere explained the potential pitfalls of stop orders.
In any case, the orders were rarely used — just 0.2% of the time.
A type of order traders use to protect against losses is being phased out, as stock exchanges seek to deal with the ramifications of huge intraday swings.
The New York Stock Exchange, in a statement, said it would no longer accept what are called stop orders, beginning Feb. 26, joining the Nasdaq NDAQ, +1.96% in barring them. Another order type called good-till-canceled also is being axed.
The NYSE, a unit of the InterncontinentalExchange ICE, +0.64% cited the risks that occur from such orders during volatile trading. A stop order could be triggered after a big downward move, but investors could be unhappy when the stock quickly recovers its value. Another risk is the stock falls much further than the level where the stop order was intended to be executed.
(Short sellers place stop orders in the opposite direction, buying if a stock exceeds a certain price.)
MarketWatch columnist Michael Sincere explained the potential pitfalls of stop orders.
In any case, the orders were rarely used — just 0.2% of the time.
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