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RBC Direct Investing™ Education Centre

Frequently Asked Questions About Trading

 

What would you Like to Know?

How Do You Charge for Partial Fills?
What Are Fast Markets?
When Can I Use Transferred Funds?
What Are the Most Common Reasons for Rejections?
Can You Provide Some Online Trading tips?
What Types of Orders Are There?
How Do You Charge for Partial Fills?
  • When an Any Part order is placed and the order is filled in more than one portion throughout the day, only 1 commission is charged.
  • If a Good Through Any Part order is placed and the order is filled in more than one portion over several days, 1 commission per day is charged.

Example:

  • If the order was filled in 3 parts and 2 were on the day the order was placed and the 3rd was on the following day, 2 commissions are charged.
  • If a client places two separate orders through the same channel for the same stock on the same side of the market on the same day, 2 commissions are charged.
  • If a client places a market order online to buy 200 RY at market in the morning and then places another order online to buy 400 more RY at a limit price and gets filled on that order in the afternoon, 2 commissions are charged.
What Are Fast Markets?

The term "fast market" is used when a stock or a group of stocks are subject to wide price fluctuations and heavy volume. A fast market can result from a sudden demand to buy or sell shares in a particular company or sector due to rumours, news, earnings announcements, or Initial Public Offerings. In addition, the morning market opening can be a very volatile time because the exchanges are executing orders investors have placed since the marked closed the day before.

As an investor, you must understand the risks associated with fast markets and the steps you can take to protect yourself from them. There are three main risks to be aware of:

Price quotes may not be accurate

In a fast market, the price of a stock may move so rapidly that even "real time" quotes are inaccurate by the time they are communicated from the exchange to investors. By the time the quote reaches investors, the stock may be trading at a much higher or lower price.

Market order execution prices may differ from your quote

If you place a market order in a fast market after viewing a "real time" quote, the stock may have already risen or fallen by a considerable margin by the time your order reaches the exchange. The quote you received may be more of an indication of what has already happened in the market than an indication of the trade execution price you will receive. In the short time between when your order is placed and when it is executed, other orders already on their way to the exchange can affect the stock price.

It is safer to place a limit order instead of a market order. In other words, place a limit buy order for the maximum price that you would be willing to buy the stock atm or a limit sell order for the minimum price you would be willing to sell the stock for. This will protect you from getting filled at an unacceptable price. This will not stop you from getting the best available price once your order reaches the exchange.

Delays in trade executions and/or trade reports

There may also be delays in trade execution and/or trade reports due to the sheer volume of trades being processed in a fast market. To avoid creating duplicate orders, you should consider these delays and the chance that your order has already been executed but not yet reported before you change or cancel your order multiple times.

It is also important to understand that during a fast market, it is possible that your order may be filled during the day but not reported until after the market has closed.

When Can I Use Transferred Funds?

Funds transferred to your RBC Direct Investing account online will be available immediately when the request is made between 4:01 a.m. and 7:54 p.m. ET, seven days a week. If the transfer is requested after 7:54 p.m., the funds will be available in your RBC Direct Investing account by 4:01 a.m. This applies to cash investment, margin, RSP and TFSA accounts.
Funds transferred online from your RBC Direct Investing account will be available immediately when the request is made between 9:00 a.m. and 4:30 p.m., Monday to Friday (except holidays). If the transfer is requested outside these hours, the funds will be available in your RBC Royal Bank account by 9:00 a.m. the next business day. This applies to cash investment and margin accounts only.

For other funds transfer questions, please speak with an investment services representative.

What are the Most Common Reasons for Rejections?
Insufficient Funds/Margin

All orders for stocks, options, mutual funds and fixed income are settled directly to or from your RBC Direct Investing account. Your RBC Direct Investing account must be in good standing. There must be sufficient funds, excess margin available or a confirmed sale transaction in your RBC Direct Investing account to cover the purchase transaction.

Inadequate Position

When placing an order to sell, verify that you hold sufficient shares to sell and that these shares are held in the account selected in the "Account #" field.

  • If there is an existing open order to sell a security and a subsequent order to sell is submitted such that the total number of shares exceeds the number of shares held, the subsequent order will not be accepted.

Please verify your account holdings (by checking your 'positions') and order status before placing any equity sell orders.

Can You Provide Some Online Trading Tips?
  • If you modify your order many times within a short period of time, you run the risk of duplicate fills.
  • If you place restrictions on your order such as "All or None", it becomes more difficult to fill because the exchange must find an exact match for your order.
  • It is virtually impossible to cancel a market order during market hours.
  • If you wish to buy or sell a stock that you expect might fluctuate greatly in price throughout the day, it is safer to place a limit order instead of a market order. - In other words, place a limit buy order for the maximum price that you would be willing to buy the stock at or a limit sell order for the minimum price you would be willing to sell the stock for. This will protect you from getting your trade filled at an unacceptable price. This will not stop you from getting the best available price once your order reaches the exchange. For example, if you wish to purchase an Initial Public Offering but are not prepared to pay more than $100 per share, place a limit order at $100. If the stock is available at a lower price, you will be filled at the lower price instead of your maximum limit price.
  • Place realistic limit orders. For example, if you place an order to buy a $100 stock at $1.00, your order will be rejected.
  • Always check the status of your previous orders before placing a new order or changing/canceling an existing order.
  • Day orders automatically expire at the end of the day's trading session. It is not necessary to cancel these orders after market hours.
  • All cancellations are "subject to prior fill." This means that it is possible that the order you're trying to cancel has already been filled but that the exchange has not yet reported the fill to RBC Direct Investing.
What Types of Orders are There?
Market Order:

This is an order to buy or sell stock immediately at the best available price.

Example: Market Order
  • You see from a live quote that stock XYZ has a bid price of $15.25, an offer price of $15.50 and a last traded price of $15.35. If you place a Market Order to buy 100 shares of XYZ "at Market", you are essentially saying "Buy 100 shares of XYZ for me immediately at the best available price." You will not know your exact price until after the order has been filled.

If you choose to enter a market order after trading hours, note that opening values may not reflect closing prices.

Limit Order:

This is an order to buy or sell stock at a specified price or better.

Example: Limit Order
  • You see from a live quote that stock XYZ has a bid price of $15.25, an offer price of $15.50 and a last traded price of $15.35. If you decide to place a Limit Order to sell 100 shares at $15.45, you are instructing the trader to sell 100 shares of stock XYZ at no less than $15.45.

If no one is willing to bid $15.45, you will not sell your shares.

  • If you decide to place a Limit Order to buy 100 shares at $15.30, you are instructing the trader to buy 100 of stock XYZ at no more than $15.30.

If no one is willing to sell at $15.30, you will not buy your shares.

Stop Loss order:

This is an order to sell, which becomes effective as a market order when the price of one board lot of the equity stated in the order declines to or below the stated price in that order. The purpose of placing such an order is either:

  • To reduce the amount of loss which might be incurred or
  • To protect part of a paper profit which might be present.
Stop Buy order:

This is an order to buy, which becomes effective as a market order when the price of one board lot of the equity stated in the order rises to or above the stated price in that order. A stop buy order is placed to accomplish one of two ends:

  • To protect a short seller in the event that the price of the equity he/she has sold, starts to climb suddenly, so as to reduce the potential loss
  • To enable a potential buyer to acquire an equity while its price is rising
Stop Limit order:

A stop limit order is one that becomes a limit order when a transaction takes place at or through (above or below) the limit price stated in the order entered. Stop limit orders with a range have a lower limit price in the case of sell orders and an upper limit price in the case of buy orders. The identification of a stop price and a lower/upper (limit) price provides you with a price range within which the order can be executed.

Example: Stop Loss / Stop Buy Order
  • A Stop Loss/Stop Buy at $75.00 becomes a Market Order once the stock trades at or through $75.00.
Example: Stop Limit Order
  • A Stop Limit at $75.00 becomes a Limit Order at $75.00 once the stock trades at or through $75.00.
Example: Stop Limit with a Range Order
  • A Stop Limit of $75.00 with a Range of $70.00 becomes a Limit Order at $70.00 once the stock trades at or through $75.00.
Some notes on Stop and Stop Limit orders:
  • Stop Loss and Stop Buy orders cannot be placed on Canadian markets; Canadian markets only accept stop limit and stop limit with a range orders
  • Stop and stop limit orders cannot be issued with an All or None restriction
  • Stop and stop limit orders must be issued with even board lot quantities only.
  • Stop orders require a stop price to be specified
  • Stop limit with a range orders require both a stop and a limit price to be specified
  • When completing a stop limit with a range purchase order, the limit price must be greater than the stop price entered
  • When completing a stop limit sell order, the limit price must be less than the stop price entered
  • In U.S. markets, stop orders are triggered if there is a bid at the stop price
Day Order

A day order will expire at the end of the day's trading session. If you place a day order after the market has closed, it will be a valid order for the next trading session.

Examples: Day Order
  • If you place a day order at 10:00 a.m. Tuesday, the order will expire at the end of Tuesday's trading session.
  • If you place a day order at 8:00 p.m. Tuesday, the order will be a day order on Wednesday and will expire at the end of Wednesday's trading session.
Good Through Order

A good through order will expire at the end of the trading session on the date you specify in your order. Orders with a good through date more than 30 days in the future are not accepted.

  • If you are placing a market order, you cannot select a good through date. Market orders must be day orders.
  • If you are placing an order after the market has closed and you want your order to expire at the end of the next day's trading session; you must enter your order as a day order instead of a good through order.
Example: Good Through Order
  • · If you place a good through order on Monday and select Friday's date as your good through date, the order will expire at the end of Friday's trading session.

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09/20/2012 12:23:32