Another Newbie With Scottrade Question
Q: in an attempt to purchase a bit of IBZT today, I had a limit order set for .0585. I saw where the low was .055, and it closed at .0586. i received no email to confirm a purchase, my money was put back into my trading cash, so it seems my order was never executed. I looked at the chart by minute(s) and saw the price was at .0585 numerous times. Can someone help me understand how this order was never placed?
A:
The security you are inquiring about is listed on the
Over-The-Counter Bulletin Board (OTCBB). One of the most common
mistakes made when trading stocks listed on the OTCBB is equating
the rules of trading listed stocks (i.e. NYSE, AMEX, etc.) with
the way orders are executed by OTCBB market makers. Those stocks
listed with an exchange t
buyers and sellers together so that investors primarily trade
with other investors in that type of market. However, stocks
listed on the OTCBB are handled differently. With OTCBB
securities, all trades involve a market maker. The market maker
usually buys from the seller and sells to the buyer.
OTCBB securities do have "Limit Order Protection" rules in place,
but that only guarantees that the market maker holding your order
can not trade ahead of you. It does not require the market maker
to "reflect" your order to the rest of the market, and it does
not prevent a different market maker from trading at or through
your price. There may be times when the market maker holding
your order will "match" your trade with another investor, but
this is done based on opportunity only. Therefore, there are
many times when you see trades above and below your price and you
still are not due a fill.
With this in mind, looking at the high, the low, or the closing
price of the day does not always provide an accurate
representation as to whether your order was due a fill.
Generally speaking, the best way to tell if you are due a fill is
if your price was reached on the Ask on buy orders or the Bid on
sell orders.