SCOTTRADE: Potential bad execution?

"Barbara" wrote Re a stock order placed Sunday not executing at or even very near Monday's opening price

I expect Scottrade is being about as truthful as it can without giving a complicated explanation. Fidelity orders also see this problem. In short, one should not count on getting the opening price. From my reading, I would call "opening price" a phantom price relative to the other prices published for a stock throughout the trading day. Opening price is based far more in speculation about how buyers and sellers value a stock.

A little dated but I think mostly still valid:

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Even in a normal market I think trading at the open is a recipe for "uncertain pricing." There have been studies of this, there's quite a bit of volatility in that initial price-discovery phase.

But it's even more so during the date in question. For bank stocks, the last trading day before 9/22 was probably one of the most volatile in history...just pull up random tickers and look at the five-day charts and you'll see what I mean (WFC is a good example - or BAC for that matter). It would not surprise me if all the news over the weekend led to some odd order imbalances and volatility at the open 9/22.

I don't know how Scottrade routes its orders, or how they interpret an order that you place 9PM the prior day, but to me the bigger issue is - why place at/near-the-open orders at all, when both the market and the sector volatility are sky-high?

-Tad

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

I checked the one minute data on BigCharts.com for BAC for 09-22-2008. The first minute saw a range from 35.50 to 36.00 and the second minute from

34.80 to 35.50. Since BAC is NYSE listed, Scottrade was correct to route the order to the NYSE. You should consider yourself fortunate to have sold at 35.50.

It is a very bad idea for individuals to trade a stock at the open or close of trading. If you cared about the price you should have used a limit order, not a market order. It is also important to note that 50 shares is an odd lot and is handled differently than a round lot. In the future you should ask your questions first and do the trade second.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Even in a normal market I think trading at the open is a recipe for "uncertain pricing." There have been studies of this, there's quite a bit of volatility in that initial price-discovery phase.

But it's even more so during the date in question. For bank stocks, the last trading day before 9/22 was probably one of the most volatile in history...just pull up random tickers and look at the five-day charts and you'll see what I mean (WFC is a good example - or BAC for that matter). It would not surprise me if all the news over the weekend led to some odd order imbalances and volatility at the open 9/22.

I don't know how Scottrade routes its orders, or how they interpret an order that you place 9PM the prior day, but to me the bigger issue is - why place at/near-the-open orders at all, when both the market and the sector volatility are sky-high?

-Tad

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.