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When a mistake is made, such as typing a sale for $65 for a stock that is worth $650, and the sale goes through, is there a way to get that stock back? Luckily I haven't made this mistake myself, but I have seen sales go through for some stocks (I get alerts when they go below whatever dollar value I set) for ridiculously low prices, and the prices they go for seem to be typos such as above.

I'm curious if it's a hard lesson for the person selling, or if they would be able to somehow cancel that transaction. Anyone here know?
 

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Hard lesson I would imagine but apparently there are "safeguards" to prevent some typos. There was the "fat finger theory" for the cause of the 2:45 Flash Crash of 2010

http://en.wikipedia.org/wiki/2010_Dow_Jones_Flash_Crash

Electronic Futures Trading Market Protections

Both CME Globex and the ICE trading systems have automatic safety features – termed “pre-trade risk management functionality” – to protect against errors in the entry of orders (such as “fat finger” errors) and extreme price swings. These features help ensure fair and orderly markets.

First, CME and ICE electronic trading systems both automatically reject orders priced outside a range of reasonability, also known as price bands. For instance, on the E-Mini contract, such band is 12 points – or approximately 1 percent – above and below the last executed trade. This prevents clearly erroneous orders from triggering a sequence of market-moving trades that later require cancellation.

Second, both CME and ICE have maximum order size limitations that prevent entry into the trading engine of an order that exceeds a predefined maximum quantity. In the E-Mini contract, for example, the maximum quantity is 2,000 contracts. With the S&P 500 Index at approximately 1,100 points as it was on May 6, two thousand E-Mini contracts would have a notional value of approximately $110 million. The average transaction size in the E-Mini contract, however, tends to be six contracts, or approximately $330,000.

Third, both CME and ICE have protections with regard to “stop loss” orders. Such orders are triggered if the market declines to a level pre-selected by the person entering the order. CME and ICE rules provide that when the market declines to the pre-selected stop level for such order, the order becomes a limit order executable only down to a price within the range of reasonability (12 points) permitted by the system, instead of becoming a market order. Requiring that stop orders have a limit avoids the potential that such stop orders could be executed no matter how low the market goes. This requirement for all stop orders to convert to limit orders prevents, for example, any stop orders from being posted at a price unreasonably below the market, such as orders at a price of one cent.

Fourth, CME Globex has Stop Spike Functionality that protects against cascading stop orders – the domino effect of one stop order triggering others. Globex’s Stop Spike Functionality pauses trading for five to ten seconds – five seconds in the case of the E-Mini contract – when the trading engine recognizes that it has a series of resting stop orders that could lead to a cascade and move the market up or down beyond a specified amount. The pause allows new orders to enter the system to restore liquidity and balance to the order book. On May 6, the Stop Spike functionality occurred on two currency futures contracts and at a critical moment in the E-Mini contract.
http://www.commodityonline.com/news/What-went-wrong-with-US-futures-on-Thursday-28089-2-1.html
 

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I'd think most brokerages have safeguards in place. This is the message I get from Waterhouse attempting this scenario: "Your limit price is too far off the current market price. Please re-enter or contact your local TD Waterhouse office for assistance.[60101]"
 

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i really like that verb renag.

new year's resolution on cmf.
let's have no renagging on the forum.

people do shoot themselves in the foot w option orders i hear. Not ones so far off they'd get rejected. Just ones like maybe to buy in an iron formation when they mean sell, etc.

far as i know such traders have got to live with the wounded foot. There's no way back.
 

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Once when the period on my keyboard was broken I put in a buy order for BCE
at $3050. It actually went through. :eek: fortunately in most
cases you'll just get it at market. Got to be more careful with thinly traded stocks.
 

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Discussion Starter #6
I guess, by the sounds of it a stock valued at around $650 would not sell for $65... but why would I get an alert that the stock price has dipped to $65? I guess I need to contact qtrade to find out, but I am curious if anyone here would know. Do others get weird alerts like this? I've noticed it seems to be for one company's stocks only (I have about 30 alerts set up, but only this one company's stocks come through at wonky prices occasionally).

Thanks everyone for your input!!
 

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When a mistake is made, such as typing a sale for $65 for a stock that is worth $650, and the sale goes through, is there a way to get that stock back? Luckily I haven't made this mistake myself, but I have seen sales go through for some stocks (I get alerts when they go below whatever dollar value I set) for ridiculously low prices, and the prices they go for seem to be typos such as above.

I'm curious if it's a hard lesson for the person selling, or if they would be able to somehow cancel that transaction. Anyone here know?
I doubt the brokerage will accept such an order.
Scotia iTrade that I'm with has some formula for calculating what limit orders they will accept.
It's something like +/- certain % of last price or last closing price.
Look up the online documentation of your brokerage - I'm pretty sure all standard brokerages will have such rules.

If a stock that on average is trading at $650 were to trade for $65 for no apparent reason, it's possible the stock exchange would take note and may even suspend trading.
 

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Error tracking

I know I have put in some really odd orders where the price is much lower or higher than the market, and TD has stopped with an error message saying that it was out of their range. I think it may be a percentage or dollar value.

Also, I have made errors where I put my buy price too high, and it's given me the market value instead.
 

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brokers don't submit unrealistic orders to exchanges. If i remember correctly from some years back, exchanges will allow an order to survive approximately 15 minutes & then, if it's not filled, they charge a kill fee to the broker dumb enough to have sent it to them in the first place. Interactive, i believe, is a broker that passes such fees along to clients, at least in some cases.

what this means is that the brokers stack up limit orders within the house until such time as each order becomes worthy of being sent to an exchange. But there's a limit to what a broker can stack in its own warehouse, so brokers have formulae to advise clients when orders are outside the boundaries.
 

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When a mistake is made, such as typing a sale for $65 for a stock that is worth $650, and the sale goes through, is there a way to get that stock back? Luckily I haven't made this mistake myself, but I have seen sales go through for some stocks (I get alerts when they go below whatever dollar value I set) for ridiculously low prices, and the prices they go for seem to be typos such as above.

I'm curious if it's a hard lesson for the person selling, or if they would be able to somehow cancel that transaction. Anyone here know?
That's what you call a "Clearly Erroneous" execution/transaction in the stock markets and a "Bustable" trade in the futures market. Most brokers do have risk management software to prevent this from happening, but they are not fail proof. The onus is always on the trader to send the correct order. The brokers are not responsible for your errors nor their computer system errors on most part. If you want to bust a trade, the request needs to be submitted usually within the half hour of execution (varies by exchanges) and it will cost you an administration fee as well.

Unlike the US market, Canada (IIROC) currently uses a discretionary set of guidelines regarding this matter. However, IIROC is in the midst of changing over to US type, where the trades are busted based on objective, transparent parameters.

Clearly Erroneous trade for NYSE & NASDAQ: (% Difference from the Last Sale Price)

Last Sale..............Regular...............After
...Price.............Trading Hours..... Hour Trading
. $0-$25.00 ........... 10% ............... 20%
$25.01-$50.00 ........ 5% ................ 10%
$50.01 & up ........... 3% ................. 6%
(Leveraged) ....... (Above x) ........ (Above x)
.(ETF/ETN) ........ (Leverage) ....... (Leverage)
........................ (Multiplier) ....... (Multiplier)


Here are some of the CME Globex products: (Could be busted outside of this range)

Futures Contract (No Bust Range)
Eurodollar, E-mini Eurodollar and LIBOR (2.5 basis points)
U.S. T-Bond (30/32nds)
10 Yr. T-Note (30/32nds)
Currency Futures (40 ticks)
S&P 500 and E-mini S&P 500 (6.00 index points)
DJIA ($5, $10, $25) (60 index points)
E-mini Nasdaq Composite (12.00 index points)
Wheat & Mini-sized Wheat (10 cents per bushel)
Soybeans & Mini-sized Soybeans (10 cents per bushel)
NYMEX Crude Oil and NYMEX miNY Crude Oil ($1.00)
COMEX Gold and miNY Gold ($10.00)

MB
 
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