Conditional/Stop Orders

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.

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. 

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.

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.  Orders can be purged, cancelled or rejected at any time by ASX, Openmarkets or Marketech for a variety of reasons, including:

• ASX market rules and regulations
• a stock goes ex-entitlement
• order expiry
• too far from market
• at discretion.

Furthermore, in order to ensure that stale orders do not remain in the system, all conditional orders (including those created as Good Till Cancelled), are automatically expired after 90 days.  Therefore, you should review your conditional orders on a regular basis to ensure they are still active and/or relevant.

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’

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 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.