How Your Buy and Sell Orders Get Filled

by Chris Nagy and Charles Rotblut, CFA

How Your Buy And Sell Orders Get Filled Splash image

Christopher “Chris” Nagy is the managing director of order routing, sales and strategy at TD Ameritrade.

I spoke to him recently about the process that occurs at the brokerage firm after an investor places a stock trade.

Charles Rotblut, CFA

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Chris Nagy is the managing director of order routing, sales and strategy at TD Ameritrade.
Charles Rotblut, CFA is a vice president at AAII and editor of the AAII Journal. Follow him on Twitter at


Richard from Florida posted over 2 years ago:

No discussion was raised about the vulnerability of a stop order to the marketplace. For example, a stock I own, XYZ, is trading at $20 a share and I place a stop loss order for 100 shares of XYZ at $16 to lock in profits or limit loss. At the same time, another person places a buy limit order for 100 shares of XYZ also for $16. Will my $16 stop loss order be executed during the nano-second no other buy/sell orders are open and because it matches the limit buy order of the other person?

Max from Montana posted over 2 years ago:

Yes.Good question. Thanks Max

Chipper from New Jersey posted over 2 years ago:

Why are bid/ask sizes of highly liquid stocks usually in the single digits when most trades take place in lots of 100?

Leonard from New York posted over 2 years ago:

In that case the single digits represent the number of lots, not shares.

Chris from California posted over 2 years ago:

Excellent information; has cleared up some confusions that I had about how limit orders worked.

Michael from Pennsylvania posted over 2 years ago:

Great article, very informative.

Timothy from Nebraska posted over 2 years ago:


That would imply an 8 dollar spread during trading hours ($4 above and below market.) That's really illiquid. Plus someone else would actually have to sell at $16 before your stop loss would be activated by the print.

Fred from Oregon posted over 2 years ago:

It seems that the trader/specialist that can see the stop-loss prices has the keys to the kingdom in terms of getting advantageous prices. Who has the ability to see stop prices. They do not show up on retail level1/level2 screens.

Charles from Connecticut posted over 2 years ago:

Absolutely no disrespect intended for a well-intentioned & quite informative article by these two professionals.

I also do not want to 'feed' some 'conspiratorial' feeling that retail investors get short shrift, etc.

The whole securities industry is literally built around the premise that the average 'retail' customer is treated with 'kid gloves' and not to be hosed ... for all the proper ethical reasons but also self-interest ... no one wants the heavy, generally misplaced, hand of 'regulators' to enter the picture and make everyone's life more complicated ... and ultimately do a 'spit' worth of little to improve the practical treatment of the retail customer.

The above all said, and it is all largely true, in today's world with trade execution margins so razor thin, the plain economic realities are that that 'last' order to get any attention will be your average retail account. One can cry & scream all they want but this is the economic reality.

Second, in my humble estimation, the concept of 'stop-loss' orders, in the present environment, borders on delusion & naivete. Yes, if the market is stable, you might get to achieve your goal ... .but do not overreach in your rational expectations.

These orders come up so fast and are aggregated en masse that the 'fill' is a quite logical & rational exercise .. that just may not fit the average retail investor's expectations. You have internal clearing before you go outside and then there are the 'dark pools, etc. The world is not what is was 10, 20, or 30 years ago.

I've found that most firms are really quite good, professional & helpful with order fill ... but you cannot delude yourself that you are the 'prioirty' customer and will get a tough 'execute' for literally pennies ( on a daily devaluing US$ no less) on the dollar.

Point: be realistic and almost cynical ... in a stable market you may get what you want on a stop/loss order. After that .... well, in a turbulent market you will get a turbulent result as a retail account. That is reality.

Al from Pennsylvania posted over 2 years ago:

Ok thanks everyone,
but i'm not getting my order quantities filled entirely on CEF's or thinly traded issues.

When I have used an "all or none" stipulation, sometimes I don't get filled, even at a better price. So how do you correctly apply the "all or none" and is it a useful tool ?

al hilditch

James from California posted over 2 years ago:

Having thought that I had a handle (ha ha) on how this works I consistently used stop loss orders on investments until several occasions when my stop executed and then the price went back up above my purchase price, effectively handing me a loss for all my good intentions. The result was that I decided to cease active trading until I figured out was I was doing wrong. Now I just buy and hold stocks with good dividends and forget growth, which has cost the industry a few commission bucks and saved my temper.

Thomas from Wisconsin posted over 2 years ago:

I used to use a lot of stop/limit orders to mitigate my losses and sell limit orders to take predetermined gains until....May 6, 2010. The unintended results and whip-sawing that I experienced made me rethink all of this. I now recognize that stop loss orders are nothing more than an offer to sell my valuable securities to someone else at a large discount!

Joel from Pennsylvania posted over 2 years ago:

To Thomas from Wisconsin:
If you no longer use stop loss orders, how do you protect yourself from a sudden drop in price? I have tried using trailing stops but have also been burned when a fluke trade drops the price below the stop and executes a market order at an unreasonable loss just before the price returns to the average trading range. I liked your comment about stop loss orders advertising your willingness to sell your valuable assets for a large discount.

Steve from California posted over 2 years ago:

is there any legal recourse for this electronic debacle? i had no intention of selling apple, but placed a stop 20% below the price on that day one year ago. we all know the price now. how were some trades cancelled?

Maurice from Missouri posted over 2 years ago:

I dont use stop limits anymore either, because other people will see my order and try to manipulate the bid/sell orders so that my order gets triggered and then market immediately go back up. I think that no one should be able to see the orders other than people facilitating the orders. That way no manipulation can occur...everyone would be at the same advantage.

Jane from California posted over 2 years ago:

Fidelity offers a private order book into which you can enter conditional trades, including a multiple contingent trade, where you can specify volume, which protects you from getting pushed out of a position on small volume.

Ted from California posted over 2 years ago:

To put the market that retail investors are exposed to in perspective, a couple of questions:
1. About what percentage of daily volume is due to the retail trader?
2. What advantage(s) do institutional traders enjoy that retail traders have no access to? In other words, how unlevel is the playing field in buying and selling stocks on exchanges?

Mark from Illinois posted over 2 years ago:

This article, while informative, again stresses the importance of "caveat emptor"-Let the buyer(or seller) beware.
There is no even playing field when it comes to knowledge about stocks or the stock market and no amount of regulation could make it so! Every person has different amounts of knowledge about different things and to think an amateur can know as much as a horde of seasoned (and sometimes ruthless) professionals is naive to the extreme.

Would you play football against Ray Lewis or Tom Brady even if there was an even playing field? Do you think you'd win? If not, then why are you actively trading stocks?

Do the smart thing and decide to buy individual stocks you don't plan on selling for a long time (decades) or decide to buy funds (ETF's or index are the best value) and hold them.

Brokerages encourage trading-that's how they make their money. They don't care whether any of the traders make money-most probably don't!

Mark from Illinois posted over 2 years ago:

Trading stocks is not anywhere similar to playing on the a sports team. Remember,your side probably also has many profession traders on it too. The timing aspects can let you change quit the game at almost anytime and even switch sides or play both sides at the same time. How many sport teams do you know allow that? Maybe it happens in Chicago with mob betting in the background.

Glen from Massachusetts posted about 1 year ago:

I have recently started trading on the TD Amitrade Think or Swim platform. TOS allows having both a paper trading account as well as a live account. Entering the same trades on both platforms has given me an appreciation for the factors affecting execution. Nearly ideitical trades entered in succession can end up with one being executed and the other not.

I have been entering orders that include what TOS calls an OCO close braket. That is an opening limit order plus two close orders. One a stop loss and the other a sell at traget, sell for profit, price. OCO means that neiter order is entered but the first to hit its limit price will execute and the other will be cancelled. (OCO, One Cancles Other).

I find that sell orders with identical instructions will sometimes be executed in one system and not the other.

Paul from Pennsylvania posted about 1 year ago:

Since May 11 the market was a no man's land for me. I feel much as Al from Penna ,..James from Calif. .and Thomas from Wisc. I'am waiting for Micro metals to bottom as a sector and securely head upward so i can fish the. Rolling -or Channeling them as i have done in the past to double my 401 in 4 years when the markets were allowed to rise with little manipulation. Read the news about AVL and REE to learn of the interfering manipulation from Asia!!! I'am watching LNG as a sector, and Nuc's ..UEC etc. I need to sharpen my focus, ..there's always a MUX-BRD-JAG ZN to watch for. That Markets gonna give me a paycheck somehow!!! PL

Ted from California posted about 1 year ago:

I've been told that most retail orders are filled by specialists or market makers, adding the spread to their commission. Now I see why the spread becomes more important as it increases.

Fred from Colorado posted about 1 year ago:

Does the above also apply to options? For example, do options (e.g. calls, puts)also use market makers, specialists?

Ron Jamison from Texas posted about 1 year ago:

Very good article. I have used both market and limit but it is always good to reenforce the principles.

joe ragg from Ohio posted 12 days ago:

Remember...... a stop loss will be sold at or BELOW your stop price!

You can lose your shirt in a falling market, and it very easy to do with a thinly traded stock.

These are all GREAT is good to be refreshed

I love using a percentage trail stop losses once I am in the Black

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