Frequently Asked Questions About Trading
IS THERE A CHARGE FOR CALLING THE TRADING DESK FOR ORDER EXECUTION?
There is no charge for calling the Trading Desk. The Trading Desk is always available as part of WIS’ service to provide our Reps with execution of client orders.
WHAT IS THE DIFFERENCE BETWEEN A STOP-LOSS AND A STOP-LIMIT?
A “Stop-Loss” is an order placed with a broker to sell a security when it reaches a certain price (a.k.a. stop order or stop market order)
A “Stop-Limit” order is an order placed with a broker that combines the features of a “stop-order” with those of a “limit-order”. A “Stop-Limit” order will be executed at a specified price or better after a given stop price has been reached. Once the stop price is reached, the “Stop-Limit” order becomes a “limit order” to buy or sell at the limit price or better.
HOW WILL I KNOW WHAT MY TICKET CHARGES WILL BE?
Your ticket charges and cost of fees assessed to you can be found in your “Schedule A”, which you signed when you joined WIS. The Trading Desk does not know these fees.
CAN I ENTER ORDERS AFTER THE CLOSE FOR THE FOLLOWING TRADE DAY?
Yes, both Fidelity Wealthscape and Pershing NETX360 systems allow for orders to be entered for the following day’s trading session.
WHEN MAY A “MARKET ON CLOSE” ORDER TO BE ENTERED?
A “MOC” (Market on Close) order may be entered NO LATER than 5 MINUTES before the close of the market.
WHERE CAN I FIND WHAT MUTUAL FUNDS ARE AVAILABLE FOR PURCHASE?
Prior to purchasing any Mutual Fund you must first check the WIS Approved Product list to ensure that Western has an agreement with the Mutual Fund. Fidelity and Pershing Mutual Fund Lists are not indicative of WIS’. Once you have confirmed that the Mutual Fund is on the WIS Approved Product List, take the following steps:
- • Fidelity —You may find the Fidelity Mutual Fund list in Wealthscape under the Markets & Research tab > Mutual Fund Screener.
- • Pershing—You may find the Pershing Mutual Fund list in NetX360, Market & Research tab > Security Search
WHAT ARE THE TYPES OF EQUITY ORDERS?
Whether contacting the Trading Department to enter an Equity Order or entering an order through Fidelity Wealthscape or Pershing NetX360, it is important to request the order type that is best for the customer and market conditions at that time. To help understand the types of orders available, listed below is an explanation of the types of orders that can be placed and how they affect execution.
MARKET ORDER- This order will typically assure you and your client of an execution, but not a specific price. When a market order is required, it can be filled at whatever price is available when the order reaches its execution point. Be advised: In a volatile market, this can be substantially different from the price that was quoted.
LIMIT ORDER- A limit order is an order to buy or sell a stock with a price restriction. A buy limit sets the maximum price the client is willing to pay, and a sell limit sets the minimum price at which the client is willing to sell. A Limit order allows a specific price to be set but does not guarantee an execution. For example, a client may wish to purchase a stock that is currently quoted at 25 bid, 25 ¼ ask, but does not want to pay more than $24. If a limit order is placed at $24 the order will only be filled if the price drops to $24 or lower and there are no orders ahead of your client´s. If the security continues to trade at its current quote, the client will not receive an execution.
STOP ORDER- A stop order is an order designed to protect a profit or guard against loss. Although it does not work well in all conditions, it can be an effective strategy in certain situations. When placing a stop order, you specify a stop price that, when reached, converts the order to a market order. For example, the client may have purchased a stock at $30 and it is now trading at $50. If it drops to $40, the client wants to sell the stock. You can place a sell stop order at $40, and if the stock trades there or below, your order becomes a market order to sell. The risk with this type of order is that once triggered*, the order can be filled at any price because it is a market order. In this example, if a stop order is in place before the market opens, and the stock opens at $20, the order will be triggered and executed far below the original stop price.
STOP LIMIT ORDER- A stop limit order is a variation on the stop order. It works in a similar fashion in that it is triggered once the stock hits the stop price, but instead of becoming a market order, it becomes a limit order at a price that is selected. For example, if a client wants to limit losses on a stock that was purchased at $50, you can enter a sell stop limit order at “$40 Stop $39 Limit.” Once the stock trades at $40 or below, the order becomes a limit order to sell at $39. This will ensure that the client does not sell at an extremely low price if a stock opens drastically lower. However, the client may still own the stock since the order was unable to be executed.
Each of the above orders has its pros and cons. You should pick the order that best suits your customer and the situation considering current market conditions.
*Triggered means the limit falls above or below the bid or ask. This does not mean it has to trade at your limit price.