Need help selling share using X-O

dreamypuma

I'm quite new to share dealing. So far I have a nominee account with X-O and would like to sell some stock.

The website only really discusses the process of buying stock rather than selling.

I want to set a collar on my stock sale, so it will only be sold once the stock reaches a minimum price. I assume this this is "Good Through"

There is a date beneath this selection, but it doesn't mention what this is for. Is this the earliest date the stock will be offered or is this for the period in which this will be offered?

In layman's terms what benefits will stop / loss offer over good through?

Any help or advise would be appreciated.

bowlhead99

If you want to sell stock with any broker, the most basic options for placing your order are:

Market
- Sell now (or ASAP in market hours) at whatever the market price is.

Stop, or Stop Loss
- Sell when the price goes down to a certain level (i.e. the price is 10 now and I'll keep the shares for now, but if it goes down to 5 please sell and stop my potential losses getting bigger)

Limit
- Sell when the price goes over a certain level (i.e. the price is 10 now, but if it reaches my limit of 15, please sell)

The 'good through' dates you mention are simply how long you want to keep the order open for. It's the last date you want them to act on your order. Basically: "I'd like to place this order to sell please, which I only want you to go ahead with if my price hits a certain level. This order is good through 30th June 2012. After that date, consider it cancelled".

Note that the Stop or Limit choices do not guarantee you will get to sell for exactly the amount you want:

Imagine you have a stop order in at 6.75, and the price is going down towards that but closes at 6.99 today, the broker won't sell your shares today. However, if there is some news overnight about Greece leaving the Euro and everyone decides to sell their risky shares, or your company makes a news announcement at 7am the next morning, you might find that nobody is willing to buy shares in that company tomorrow a.m. at 6.99 or 6.98, or 6.75 or 6.74 or in fact anything over 5.50. So although the broker knows he needs to sell your shares, because you gave him an instruction to sell if they went down to 6.75 or below, you will simply join a queue with everyone else. If the shares are not very liquid (ie a big company has millions of shares traded every day, a small one may only be a few thousand), you may end up selling for 5.45 that morning.

This will be particularly frustrating if the market recovers and the shares are trading at 7.50 by Friday, after triggering your stop below 6.75 on Wednesday, but that's life. Basically, if you really can't afford to sell below a particular price, sell right now and get the cash, or set a higher stop point.

Oh and just on another piece of terminology you used: I know what you're getting at, but a 'collar' is a specific type of hedging strategy using 'put' and 'call' options to limit your upside potential and downside risk. Don't worry about these for now as options trading is only for experienced investors and is not something the more basic brokers let you do. I just wouldn't use the term 'collar' in financial circles when all you're trying to do is set a stop loss order.

The x-o help page on how to place an order is here: http://www.x-o.co.uk/online-user-guide.htm#place-order. With the info above about how trading in general actually works, you should find it very easy. Disclaimer, I've never used x-o.

sabretoothtigger

Collar does sound like options. Orders can pass with bad prices, I dont like them as they are static.

What I find best is to trail stop loss when buying and limit to sell. That way it wont as easily force a bad price on you


One of the best ones is a trailing stop loss, because it will move upwards in a rise. It tends to act like a noose tightening, eventually it forces a sale as almost every stock will pull back some time

bowlhead99

A trailing stop loss is one where the stop point literally trails the current market price as it moves up - but if the price goes down from that top point, the stop stays where it is. This can help you 'run your winners' but also let you cash out before you lose it all again.

Sabre, which broker(s) do you use which have trailing stops? Or do you just do them manually by watching the market like a hawk? I have a TD Ameritrade account from when I lived in the US, it supports trailing stops (at a percentage or absolute distance away from the high price) and lots of other decent order features: you can even have a whole chain of orders contingent on each other at different prices.

However my TD Direct Investing (formerly TD Waterhouse) account in the UK doesn't seem to support trailing stops, even though it's one of the better brokers I've used over here. In fact, you can't even set a stop and limit sell order at the same time (e.g. you have 1000 shares, price is 8.00, you place a stop order to sell them at 5.00, you then can't place a limit order to sell them at 10.00 because it says you've already committed them to an order - even though the prices are completely opposite ends of the spectrum and have no danger of being executed on the same day).

Ifts

bowlhead99 wrote: »

A trailing stop loss is one where the stop point literally trails the current market price as it moves up - but if the price goes down from that top point, the stop stays where it is. This can help you 'run your winners' but also let you cash out before you lose it all again.

However my TD Direct Investing (formerly TD Waterhouse) account in the UK doesn't seem to support trailing stops, even though it's one of the better brokers I've used over here.

The Share Centre offer this:

Tracking stop-loss

A tracking stop-loss (or trailing stop-loss) offers an added advantage to a stop-loss limit by allowing you to lock in profits as share prices rise and sell the shares when their value falls by a value decided by you.

https://www.share.com/a/tracking-stop-loss.html

sabretoothtigger

My last broker which did a trail went bankrupt. Im sure the fancy brokers will do tons of orders, other people Ive heard have a program at home that will track and automate orders with direct access dealing

I actually do it manually most of the time, like just now with BG Group I figured 1304 was a definite maybe for a top, edged the stop up pretty tight and sure enough it has fallen enough to justify it though you can never tell as it may break through or I'd just have done a limit

dreamypuma

Thanks all, especially bowlhead. A lot to take in but I'll take a good read. All seems self explanatory but i'm sure i'll have further questions shortly. Think the confusion on my part are more the peculiarities of x-o's website.

dreamypuma

Right I've had a good look at the information provided and decided that I want to sell if the stock reaches a set level or above only.

Am I correct in understanding that my order type would be Good Through, with a limit price of the minimum I would accept for my stock? I then set the date (duration) for which I would offer this stock at this minimum price?

If the order is not executed by the close of my chosen good through date, lets just say the stock remains static or falls, do I still pay the transaction charge? Or am I only charged if executed?

What benefits are there in choosing longer settlement dates over shorter ones? Are these like settling invoices and providing more favourable credit terms? ie 30days 60days, thus making the stock more appealing to a potential buyer?

Ifts

dreamypuma wrote: »

Am I correct in understanding that my order type would be Good Through, with a limit price of the minimum I would accept for my stock? I then set the date (duration) for which I would offer this stock at this minimum price?

Yes.

If the order is not executed by the close of my chosen good through date, lets just say the stock remains static or falls, do I still pay the transaction charge? Or am I only charged if executed?

You only pay if order is executed.

What benefits are there in choosing longer settlement dates over shorter ones? Are these like settling invoices and providing more favourable credit terms? ie 30days 60days, thus making the stock more appealing to a potential buyer?

Explained in this link: http://thesharehub.com/?p=652

dreamypuma

Ifts wrote: »

Yes.



You only pay if order is executed.



Explained in this link: http://thesharehub.com/?p=652

Thanks for your help.

bowlhead99

dreamypuma wrote: »

What benefits are there in choosing longer settlement dates over shorter ones? Are these like settling invoices and providing more favourable credit terms? ie 30days 60days

Yes - when you have this facility available from your broker as a buyer, it's advantageous to have a longer settlement period in which to find the cash, and if the market moves in the meantime you can even sell out your trade without having to have ever found the full amount of cash (e.g. buy on a T-10 and then sell on a T-3 with the cash both ways being due the same day).

But:

dreamypuma wrote: »

, thus making the stock more appealing to a potential buyer?

To be honest, if you're thinking about securing a better sale price - not really, especially given you're not selling tens of thousands worth. The industry standard settlement is 3 days, and the general quoted bid/offer prices at a moment in time (e.g. bid 99.0p, offer 99.5p) assume standard settlement.

When your broker is sitting on your sell/limit order, I believe everyone is effectively waiting for the a market maker's bid price to reach your trigger point. Only then will there be a firm quote for the actual number of shares and specific settlement terms, and the sell price may well be a little bit inside the standard quoted bid-offer spread (e.g. 99.1p) even if you go for the normal 3 day settlement.

It might be that a very small premium is paid if a)you're willing to wait 5 or 10 or 20 business days instead of just the normal 3 and b) if there's a huge demand to buy on extended terms. But in practice, it won't get your shares snapped up and traded any quicker for any significant extra cash, for the inconvenience of waiting an extra week or three.

When buying, during market hours where I can get a firm quote, yes I will sometimes buy on extended terms for the convenience at minimal extra cost. If leaving an order with my broker to buy at a price of 'x' in the next 'y' weeks I'll just go with the standard terms, as one would assume my buy order will have a better chance of clearing on those, than if I ask for special extra terms.

And when selling, the only reason I might go for a T5 or T10 instead of the standard 3 is if I held actual paper share certificates which I needed to get to the broker through the post in time for settlement day. If the broker already has my shares electronically, I just want the sale to go through at my desired price ASAP, and messing with extended terms is not going to get me a better deal in practice (ok, might be an extra 0.001% on the price, but leaving me short on actual cash to do more deals or just generally live my life)