I posted an article on the QiT blog December 17th, 2017 about Order Types. If you’re a trader – I’m assuming you are or otherwise, you won’t be here – it may be worth a read. In that newsletter, I casually threw out the term “OPG orders” and I got a flood of emails asking what in tarnation is OPG time in force.
Has this ever happened to you?
You place your market order to sell XYZ at the opening price. Much to your consternation, your trade doesn’t execute until 9:32 a.m. ET, and by then, the price is lower than it was at the market open. (Of course, it would be lower because when has Mr. Market ever given us a break?)
This could make you Cry
If you mark your order as a DAY order, many brokers will hold these orders until the markets open before routing them to the exchange. Even in this age of blink of an eye transfers, it can still take a few minutes for an exchange to receive and queue your order. This means your order gets filled a few minutes after the open.
The opening price for a stock is calculated by taking all the pre-market orders and setting a price that satisfies the greatest number of buyers and sellers (please read about Open Cross).
That price then becomes the opening price. This is the reason why we often see gaps between yesterday’s closing price and today’s opening price.
So how do we tell our broker that we want to participate in the opening price when submitting our order prior to the open?
We use a different TIF (time in force) designation for our order.
Instead of using DAY, we use OPG, although your broker may use a different name.
The exchange accepts OPG orders if it is received before 9:15 AM (ET).
The order can be canceled after 9:15 AM, but it cannot be edited. After 9:28 AM, OPG orders cannot be edited or canceled.
If you are placing your trades the evening before, you should have no problems here.
So sleep in and don’t worry about it.
Make sure you only use this with Market Orders
Now keep in mind that if you use a LIMIT order with an OPG, if the order isn’t filled at the open, it will be canceled. So for those portfolios that use LIMIT orders to exit positions, do not use the OPG designation. Use DAY instead. Just saying!
There are no guarantees in life or trading. But using the OPG designation for your market exits, you will find that your fills will more accurately reflect a stock’s opening price. And, your number of bad fills will greatly decrease.
Now if I could just figure out how to decrease bad hair days.
ALWAYS FOLLOW THE RULES
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