Partially executed orders and brokerage

Eager · 21 October 2011

Hope someone can answer this to satisfy my curiosity more than anything else. Something I've never understood is the brokerage rules and payment of monies if I offer to buy or sell shares at a nominated price, instead of at market price (which is what I normally do), and the sale is incomplete.

Scenario: I intend to sell 1000 shares in a company and the lowest offer price at that time is $5.05. I name my price and put in an offer to sell the 1,000 shares at $5.00. I can see them right there, at the top of the Sell column; 1000 shares at $5.00. If someone then buys 400 of my shares at market price ($5.00), but the share price drifts through the day and my remaining 600 shares do not get sold, what happens?

Does $2000 (400 shares x $5.00) get deposited into my account at T+3, less brokerage, or does all the money get withheld until all the shares are sold? And, if it takes several separate transactions until all my shares are sold, how often am I charged brokerage?

howmanyru · 21 October 2011

sell order stays open until all shares are sold, then you get charged one brokerage transaction fee.

Julia · 21 October 2011

Eager said:
Hope someone can answer this to satisfy my curiosity more than anything else. Something I've never understood is the brokerage rules and payment of monies if I offer to buy or sell shares at a nominated price, instead of at market price (which is what I normally do), and the sale is incomplete.

Scenario: I intend to sell 1000 shares in a company and the lowest offer price at that time is $5.05. I name my price and put in an offer to sell the 1,000 shares at $5.00. I can see them right there, at the top of the Sell column; 1000 shares at $5.00. If someone then buys 400 of my shares at market price ($5.00), but the share price drifts through the day and my remaining 600 shares do not get sold, what happens?

Does $2000 (400 shares x $5.00) get deposited into my account at T+3, less brokerage, or does all the money get withheld until all the shares are sold? And, if it takes several separate transactions until all my shares are sold, how often am I charged brokerage?

You are charged just the one amount of brokerage. The unsold portion of your order will sit in the market until it is filled, or when e.g. the end of the month wipes it out and you have to re-present the order.

It's a good reason to check the liquidity of stocks before buying them in the first place.

pixel · 22 October 2011

Julia said:
You are charged just the one amount of brokerage. The unsold portion of your order will sit in the market until it is filled, or when e.g. the end of the month wipes it out and you have to re-present the order.

That is not always the case, but depends on your Broker.

It's true for example if you're trading with Westpac: If only part of my sell order gets taken today, I can even move the unfilled portion up a notch (assuming I sense I can get an even better price tomorrow) and hold out for the remainder. Once that is finally sold, or I've decided it's enough, the remainder is executed without any brokerage.

Other brokers, many onliners in fact, will charge another brokerage when the remaining position is finally sold; it can drag out and you can find you're charged several lots over successive days, if your order is taken out in many small nibbles over time.

Brokers with that sort of rule will however compensate that by lumping a gernerous number of separate orders on one Contract and with one brokerage, provided they're over the same stock in the same direction on the same day. I can take advavtage of that arrangement by taking half a dozen bites of a stock that oscillates during the day by a few of pips up, down, up, down...
Take today's BHP (and assume you read the short-term chart right), there were five trades in it, each with around 20c margin. Buy a small lot - say 130 shares - and sell them higher; buy again a small amount, sell higher, etc as shown on the chart below.
The ranges are drawn free-hand, so let's say you make 24+24+18+30+18c=112c times 130; you pay $25 brokerage for the buys, $25 for the sell orders and pocket $98.20 net profit.

please note, I picked BHP at random because I saw those 5 potential trades on the chart I've been working with anyway. I had to choose 130 shares each to stay below $25,000 Total contract value; otherwise, the broker I'm thinking of would charge 0.11% of the aggregate, which would've made the example messier to calculate. This is about the principle of the exercise, not an actual sequence of trades.

Maybe a better example is AGO on Thursday:
One quickie early, netting 4c, then 3 trades at 7c each later, a total of 25c. The sp being so much lower, you could buy 1500 shares each time, which of course limits your exposure, yet you still make $375 minus $50 brokerage. Not bad for a day's work.

choofer · 22 October 2011

pixel said:
That is not always the case, but depends on your Broker.

It's true for example if you're trading with Westpac: If only part of my sell order gets taken today, I can even move the unfilled portion up a notch (assuming I sense I can get an even better price tomorrow) and hold out for the remainder. Once that is finally sold, or I've decided it's enough, the remainder is executed without any brokerage.

Other brokers, many onliners in fact, will charge another brokerage when the remaining position is finally sold; it can drag out and you can find you're charged several lots over successive days, if your order is taken out in many small nibbles over time.

Brokers with that sort of rule will however compensate that by lumping a gernerous number of separate orders on one Contract and with one brokerage, provided they're over the same stock in the same direction on the same day. I can take advavtage of that arrangement by taking half a dozen bites of a stock that oscillates during the day by a few of pips up, down, up, down...
Take today's BHP (and assume you read the short-term chart right), there were five trades in it, each with around 20c margin. Buy a small lot - say 130 shares - and sell them higher; buy again a small amount, sell higher, etc as shown on the chart below.
The ranges are drawn free-hand, so let's say you make 24+24+18+30+18c=112c times 130; you pay $25 brokerage for the buys, $25 for the sell orders and pocket $98.20 net profit.

View attachment 44937
please note, I picked BHP at random because I saw those 5 potential trades on the chart I've been working with anyway. I had to choose 130 shares each to stay below $25,000 Total contract value; otherwise, the broker I'm thinking of would charge 0.11% of the aggregate, which would've made the example messier to calculate. This is about the principle of the exercise, not an actual sequence of trades.

Maybe a better example is AGO on Thursday:
One quickie early, netting 4c, then 3 trades at 7c each later, a total of 25c. The sp being so much lower, you could buy 1500 shares each time, which of course limits your exposure, yet you still make $375 minus $50 brokerage. Not bad for a day's work.

View attachment 44939

Gaddafi partially executed by order lol

Eager · 22 October 2011

choofer said:
Gaddafi partially executed by order lol

Thanks for the replies guys. I'm not a trader as such, more an investor, probably only buying or selling 8 to 10 times per year, and I use Comsec. Always at market price too, so I'm aware of the pitfalls of low volume stocks etc. I just never knew how the scenario I described panned out.

Cheers.

Julia · 22 October 2011

pixel said:
That is not always the case, but depends on your Broker.

Fair enough, pixel. My answer was based on the premise that if Eager was asking such a question, he is unlikely to be experienced enough to be doing the sort of trading you're referring to.

Wysiwyg · 13 November 2014

Julia said:
You are charged just the one amount of brokerage. The unsold portion of your order will sit in the market until it is filled, or when e.g. the end of the month wipes it out and you have to re-present the order.

It's a good reason to check the liquidity of stocks before buying them in the first place.

It is worth pointing out to the viewers that some brokerage firms charge brokerage on partial fills of a different day.
Example where a limit order is placed until expires --

Monday - place order for 10000 shares and 2000 filled | Brokerage = $20
Tuesday - 1000 shares filled | Brokerage = $20
Wednesday - 5000 shares filled | Brokerage = $20
Thursday - 2000 shares filled and order complete | Brokerage $20

Brokerage total = $80

Check with your respective brokers.

Julia · 13 November 2014

Well, if that was happening, surely you'd pretty smartly switch to another broker whose practice is as I described.

pixel · 13 November 2014

Julia said:
Well, if that was happening, surely you'd pretty smartly switch to another broker whose practice is as I described.

It's horses for courses, Julia;

I am using two different brokers:
One allows me to take a dozen bites on any day, and still issues a single contract note with one brokerage.
The other charges brokerage per order, regardless of how many days it takes the order to be filled.

I use the former for Intraday swing trades, the latter when I want to buy a position to hold over time.
Other traders may have different styles and strategies. The important element is that you know how things work and how one or the other affects the outcome. Then there is no need to switch.

Julia · 13 November 2014

pixel said:
It's horses for courses, Julia;

I am using two different brokers:
One allows me to take a dozen bites on any day, and still issues a single contract note with one brokerage.
The other charges brokerage per order, regardless of how many days it takes the order to be filled.

I use the former for Intraday swing trades, the latter when I want to buy a position to hold over time.

Well, both of those still have the one brokerage charge.
That was the point I was making.

In contrast to

Monday - place order for 10000 shares and 2000 filled | Brokerage = $20
Tuesday - 1000 shares filled | Brokerage = $20
Wednesday - 5000 shares filled | Brokerage = $20
Thursday - 2000 shares filled and order complete | Brokerage $20

where four lots of brokerage are charged to complete the one order

ROE · 14 November 2014

Eager said:
Thanks for the replies guys. I'm not a trader as such, more an investor, probably only buying or selling 8 to 10 times per year, and I use Comsec. Always at market price too, so I'm aware of the pitfalls of low volume stocks etc. I just never knew how the scenario I described panned out.

Cheers.

you are fine with comsec, they charge one lot of brokerage for that sell instruction regardless how many bites the market takes and they do t+3 for you as soon as a bites is taken out.
in you case your partial sold will be settle T+3 and the rest will sit in the market until it expire or got filled

but comsec also let you change the price for the rest of the parcel and it still cost you 1 brokerage and you can extend the expiry date by another 4 weeks when your parcel about to expire ... you can only get maximum of 4 weeks so if your parcel is 2 days out from expiry date you can only extend it by another 26 days (including weekends/holiday etc..)

this is how they charge brokerage your partial sold parcel if it is 10K and under they charge you $19.95
and if the rest and the previous sold parcel all add up under 10K all the other parcel will be charge $0 brokerage

if they tick over 10K and up to 25K they charge you another $10 for the rest of the parcel.

and if your partial sold parcel is over 10K they charge $29.95 and the rest and previously sold parcel all add up to 25K or less they charge you $0 from then on.

higher than 25K, still one brokerage but 0.12% of the value of the parcel

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