Stop orders are orders to buy or sell securities, executed when the price reaches a specific amount that the Client has set. It is an innovative service, allowing the Client to place Stop Orders both on national and international markets. BCP is the first institution to offer this feature.
This service is meant especially for experienced Clients who like to invest in the stock market and are acquainted with how capital markets operate. |
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Main Advantages
- Convenience - Extremely useful for investors who don't have the time to continuously track price fluctuations;
- Free service - Regular exchange order fees apply;
- Safety - When placing a Stop Order, Clients ensure investment and can limit their loss by fixing the maximum loss value they willing to risk in regards to each portfolio investment.
- Transparency - Clients may, at any given moment, view and cancel Stop Orders before these are executed.
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Kinds of Stop Orders
A Stop order (to buy or sell) is executed when a price condition (trigger price), previously established by the Client, is met.
There are two kinds of Stop Orders:
- Stop Limit: is a Buy Stop order, an option which is generally used by investors who intend to profit from a rising price trend;
- Stop Loss: is a Sell Stop order, usually used to lock a position so as to limit loss ensuing from a drop in quoted price. It is designed to hedge from capital losses. Placing a Stop order (buy/sell) presupposes establishing a first price - the trigger price, which means the order is only processed if the market reaches a certain price - and a second price - the limit price, limiting the amount at which you wish the order to be executed;
The trigger price thus indicates the amount at which the exchange system is meant to execute an order.
Available Markets
Stop Orders can be placed in the national market and the following international markets:
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Zurich |
Amsterdam |
Frankfurt |
London |
NASDAQ |
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Madrid |
Milan |
Paris |
Stockholm |
New York |
The time limit for Stop Orders is 30 days (as in regular stock exchange orders).
Charges
Charges are the same as for regular Stock exchange orders, meaning the Customer will bear no additional fees.
Example of a Sell Order (Stop Loss)
Scenario: An investor has bought 500 shares of company X.
The current quoted price is: EUR 5,00.
Investor's goal: to hedge from possible capital losses.
- 1st step: after having analyzed market and capital gain odds, investor stipulates that he/she is willing to bear a maximum loss of 10%;
- 2nd step: investor places a Sell Stop order (Stop Loss) setting the first price - trigger price - at EUR 4,50;
- 3rd step: investor sets the second price - ask price - and chooses from one of three options:
- Option 1 - Ask price matches trigger price: EUR 4,50.
- Option 2 - Ask price is below trigger price: EUR 4,25.
- Option 3 - Best ask price (available only for national stock exchange).
The trigger price thus indicates the amount at which the exchange system is meant to execute an order.
Example of a Buy Order (Stop Limit):
The current quoted price for Y is: EUR 10,00.
Investor's goal : to maximize investment, taking advantage of a rising price trend after, for example, a reading of technical reports.
- 1st step: after studying technical reports, investor decides on the amount that will draw the line for a rising price trend: EUR 12,50;
- 2nd step: investor places a Buy Stop order (Stop Limit) setting the first price - trigger price - at EUR 12,50, for the purchase of 750 shares;
- 3rd step: investor sets the second price - bid price - and chooses from one of three options:
- Option 1 - Bid price matches trigger price: EUR 12,50;
- Option 2 - Bid price is higher than trigger price: EUR 13,50;
- Option 3 - Best bid price (available only for national stock exchange).
The trigger price thus indicates the amount at which the exchange system is meant to execute an order.
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