Can I place conditional orders on Marketech Focus?

Can I place conditional orders on Marketech Focus?

Conditional orders are those which will only be placed in the market if/when certain price criteria (Trigger Price) are met.  We offer Conditional Orders (including Conditional/Stop Orders and Trailing Stop Orders) for FocusPro subscribers only.  While the intention of a Conditional Order instruction is to limit losses and/or maximise profits, an instruction may not always be effective because market conditions may make it impossible to execute a particular instruction.  Furthermore, a triggered Conditional Order instruction does not guarantee that your order will be filled, and you are responsible for monitoring the status of your Conditional Order and/or resultant market order.  As such, Marketech recommends you seek appropriate professional advice before using a Conditional Orders.  Please refer to our Terms and Conditions and our Conditional Trading Risk Disclosure Statement for more information.
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Conditional/Stop Orders

Conditional/Stop Orders allow you to trigger a buy or sell order once a certain price event has occurred (Trigger Price).  For example, you may want to limit your losses if a stock trades below a certain level (stop loss) or lock-in some profit if the stock trades above a certain level (take profit). It's important to note that conditional orders are not "set and forget" orders that allow you trade without watching the market.  There are still a number of factors that need to be monitored in order for your order to transact successfully. It is important to note, there are no 'market' orders available in Conditional/Stop Orders. When the condition triggers, the order is placed at the specified limit price. In a rapid moving market, your Conditional/Stop Order may not be executed when your trigger condition is met, if the limit price is not set at the correct price, or if there is insufficient volume.



Steps in the order:

1)    Nominate the Trigger Price – when the Last Traded price is:
  - Above
  - Below
  - At or above
  - At or below.

2)     Set the Price and Quantity/Value of the order to you wish to place in the market once the Trigger is met.

3)     Then, once the Trigger condition is met, the order is automatically placed into the market at the desired level.

4)     Orders are reviewed by Openmarkets once triggered and sent to market, as such, if there are any issues with the order, it may be rejected at that point.

 

Here are a few examples of where Conditional/Stop Orders may be useful.


Stop loss 

You expect the price of the stock to rise and wish to minimize your losses on a shareholding, by triggering a sell order, in the event that the price falls.

Example:

Step 1 - You nominate Last Traded price At or below $24.50 as the trigger to create a sell order, so if the stock trades at $24.50 on the ASX a sell order will be placed.

Step 2 – You nominate $24.25 as the Price you want to place the sell order at.

Step 3 - You nominate the number of units to sell at $24.25 once the stock touches $24.50. 





In this scenario you can set your sell price above or below your Trigger Price, meaning that when the stock trades at $24.50, you could also choose to put the sell order the market at $25.00 in the hope there is a bounce. 


Buy the dip
You think the stock is overvalued so don’t want to place a buy order just yet.  You want to wait for the price to fall so that you can buy the stock at a lower price (buy the dip), expecting that it will go up again after that.

Step 1 - You nominate a Trigger Price in your buy zone.

Step 2 - Then nominate buy order Price. (You can nominate a price higher or lower than your trigger.)

  

Place order a long way from market price

There are restrictions about placing an order in the market if that order is too far from the last traded price.

For example, if a stock is trading at $0.025, you cannot put a sell order in at $0.084.

You can use the Trigger to nominate a price closer to your sell price. In this case, you could put a Trigger in Above $0.072 to then place a sell order at $0.084 (once the price trades above $0.072).



Buy the break

You can use a Conditional/Stop Order to buy a stock above the current price - once it goes above a certain price.

For example, if you wish to see a bit of upwards momentum before entering a trade, you could nominate a Trigger Price and then place an order to buy it at a certain price above the market.

The stock is trending sideways from $0.50 to $0.53. You feel that if it cracks through $0.56 that it may start to move upwards again. You set your trigger At $0.56 and your Buy Price at $0.58.  In this way, if there is sufficient volume at less than $0.58, your order will be filled at those levels, otherwise the order will be filled at $0.58 if there is sufficient volume.




What could go wrong?


Available cash/stock

When you place a stop order, the order is not sent to Openmarkets until the trigger is met. You will need to ensure cash/stock is available at the point of the order being triggered, or it will not be accepted. Funds are not ‘held’ until the order is placed.

Similarly, if you have sold the stock already your sell order will fail.

ASX trading rules and review

All orders are reviewed by Openmarkets before being placed in the market, usually this is done electronically, however in some cases by a Designated Trading Representative.

Your order will not be reviewed until placed, which is after the trigger condition is met, so your order may be rejected at that time.

Stop orders can be purged, cancelled or rejected at any time by Marketech, Openmarkets or the ASX themselves. You should review them on a regular basis to ensure they are still active.

Technical Issues

There is no way to guarantee the stability of the various software providers between you and the stock market. There is also no guarantee that the internet or the stock market itself will be operating correctly at the time you place an order, or at the time a trigger event occurs.

We operate our technology on a ‘best endeavours’ basis, and  work through any technical issues that may cause a problem for your trading as quickly as we can. However we cannot provide any guarantee that an order will be triggered nor can we can cover your losses due to technological outages or failures. You will need to regularly review all of your orders to ensure they are operating in the way that you expected.

The ‘gap-up or gap-down’

Stocks may not necessarily trade at every price step, and the price that you wish to buy or sell at or may be skipped over leaving your order sitting in the market.

For example: Your stock has been comfortably trading above $6.00, so to protect yourself on the down side, you place a conditional order which triggers when the stock trades at or below $5.75, to sell at $5.70.  The US markets are down heavily overnight, then the ASX follows suit. Your stock opens at $5.65.  As the opening price is below your trigger price, the market order is placed at $5.70.  However, as the stock is now trading below your sell price, your sell order will sit in the market at $5.70c.

This can happen for any number of reasons, including after a trading halt, or when a stock is rising/falling very quickly.




Stuck in the depth

Orders are queued on a 'first in, first out' basis ie orders that are placed first, at any price step, are executed first. BUY and SELL orders placed in the ASX market are represented in the Depth. In addition to the orders visible in the Depth, there are also buyers and sellers with orders yet to be entered into the market, buy and sell orders that are on the Cboe market, and/or buy and sell orders in the ‘centre-point’ market -none of which are visible.

When you place an order, you may be behind a number of other buyers and sellers at your price point. As they have priority in the queue (they were there first), the stock may trade at that price, but it may not clear all of the orders in front of you.

Make sure to monitor your orders in the ASX market depth by expanding the depth; just by clicking on the price point. If your trading account is active (by entering your trading PIN number) you should see your order highlighted in the market in bold.

In the example below, a buy order for 500,000 shares was triggered when the stock traded at or below $0.030.  As a result the market order to buy 500,000 shares is placed, but there are already orders in the screen to buy 376,755 shares that will trade first.  So, if the shares continue to trade down to $0.028 but only 200,000 shares transact at at that price before rebounding, then this buy order will remain untouched.




Trailing Stop Orders

Trailing Stop Orders are similar to Conditional/Stop Orders, but rather than remaining at a specific price, the Trigger Price follows the market price by a predefined margin (dollars/steps/percent) when it moves in a favourable direction, but remains in place when the market moves in the opposite direction. 

This potentially helps maximise profit, as the Trailing Stop follows the trajectory of the market price as it moves in your favour, while potentially limiting risk by capping the downside if/when the market moves in the opposite direction. 

   

You expect the price of the stock to rise and wish to minimize your losses on a shareholding, by triggering a sell order, in the event that the price falls by a certain amount.

Example:

Step 1 - You nominate how far (Dollars/Steps/Percent) Above or Below the market price you want the Trailing price to follow the market.

  

Step 2 – You nominate how you want the Trailing price to move when the market moves (Dollars/Steps/Percent).



Step 3 - You nominate the Quantity/Value of the order to be placed as Market to Limit order when triggered. 

It is important to note, there are no 'limit' orders available in Trailing Stop Orders. When the condition triggers, the order is placed at the current market price. Therefore, when using these conditional orders, it is important to note that your trail start price may differ significantly from where your trail end condition is met. Further, as the fired order is a market order, in a rapid moving market your Trailing Stop Order may be executed at a significantly less favourable price than where your trigger condition is met. 

Marketech recommends you seek appropriate professional advice before using a Conditional Orders.  Please refer to our Terms and Conditions and our Conditional Trading Risk Disclosure Statement for more information.

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