Order Execution Question: Lots or Odd-lots?

[Avarice 10]

Hello all, I have a very noobish question concerning stock trades.

 

What's the advantage in trading in lots? My entry and target orders are both STPLMTs, but my stop loss is a MKT order -- am I at a disadvantage (execution-wise) if I trade in odd lots? Or am I perfectly safe putting up trades for 1,234 shares?

 

On a more general note: can someone point me to a documentation of what happens to my order once I press the "transmit" button? I found a small infographic on IB's website explaining their SMART routing technique, but if I'm honest it's mostly gibberish to me :missy:

 

Much obliged,

A

[Avarice 10]

Well don't be shy, I won't bite

[SIUYA 11]

i dont think it makes any difference these days. Before the advent of computers odd lots were a pain for stock settlements.

now you just have to be careful of broker minimums and making sure they charge you for the order.

In terms of splitting an order over the day...are you really big enough to worry.

[TheNegotiator 13]

Just so you know, the difference between a limit order and a market order is what it sounds like. Limit is limited to the price you place. Either you get filled at that price or you don't. Market orders mean that you take the best possible market price at the time your order reaches the exchange. If you have a buy market stop order at a certain price, then when the price is touched you will execute a market order to buy at the lowest offered price. In volatile markets this can be an issue as price changes very quickly.

[Avarice 10]

Thanks for the replies!

 

My main concern was that an odd lot order would be treated differently (slower?) by the exchanges. I had that wierd idea of two seperate queues, one for lots and one for odd lots, with the latter being on a lesser settlement priority than the former. Since my sizing algorithm does not round to the nearest 100 I do trade a lot in odd lots and I was afraid that my stop-loss market order would be handed down (past the lots) until it was finally filled -- resulting in unnecessary slippage.

 

Siuya's remark about computerized settlements makes absolute sense, thanks for that. And no I'm not big enough to worry about splitting an order over a day. But we'll get there. Someday. :haha:

 

A

[shakespeare515 10]

Hi Avarice,

odd lots shouldn't be a problem since there are so many traders trading minis and micro lots. It is easy for a broker to match up the orders. as far as your stop being a MKT order, that is standard, stops are usually (if not always) a market order, which does, as Negotiator correctly pointed out, expose you to more risk in volatile market conditions...

 

...good trades,

Sam