There are a few reasons why an order can be automatically cancelled or rejected. Usually, the decision is made by the exchange itself (i.e the NASDAQ or NYSE) if their rules determine a limit, stop-loss or stop-buy order has been placed by mistake.

How to avoid your order being cancelled or rejected

The most common cause is that the price you entered is either too close or too far away from the current or opening market price. If you're placing orders while the US markets are closed, check the latest share prices on Yahoo finance. Yahoo finance continues to update share prices during after-market trading.

You'll see a link to the Yahoo finance page for each company and ETF at the bottom of the investment in Hatch.

Limit orders

Limit buy order: The price you entered was too high

The purpose of limit buy orders is to buy shares at the current market price or lower. The exchanges (ie. Nasdaq and NYSE) have automated checks in place to cancel an order if the price you entered was so far above the current market price that it looks like a mistake. For example:

  • Company X has a closing share price of $100
  • You place a limit order to buy shares for $105 thinking the opening share price may be higher than the closing price
  • During after-market trading, the share price actually drops to $80
  • When the exchange runs their checks before the market opens, they see you tried to buy shares for $25 above the opening market price. There's no reason why an investor would want to pay more for shares than they have to (unless they've placed a stop-buy order), so your order is considered a mistake and automatically cancelled.

Limit sell order: Your price was too low

The purpose of limit sell orders is to sell shares at the current market price or higher. The exchanges (ie. Nasdaq and NYSE) have automated checks in place to cancel an order if the price you entered is too far below the current market price that it looks like a mistake. For example:

  • Company X has a closing share price of $100
  • You place a limit order to sell shares for $110 thinking the opening share price may be higher than the closing price
  • During after-market trading, the share price actually rises to $130
  • When the exchange runs their checks before the market opens, they see you tried to sell shares for $20 below the opening market price. Investors shouldn't be selling their shares for less than the current price (unless they place a stop-loss order), so your order is considered a mistake and automatically cancelled.

It's a good idea to check Yahoo finance while the markets are closed because prices can change a bit from the closing price you see in Hatch. This will give you the most accurate current price and can help you avoid having your orders cancelled.

The cancellation rules

A lot of Hatch investors place a limit buy and sell orders just above or below the current market price, because they just want certainty over the share price and to be asleep when the US markets open. You're allowed to do that! These rules are in place to stop investors placing the wrong order by accident and are there to protect you. You can place a limit buy or sell order up to these thresholds:

  • $1 - $25 USD a share: 10% above market price for limit buys (10% below for sells)
  • $26 - $50 USD a share: 5% above market price for limit buys (15% below for sells)
  • $50+ USD a share: 3% above market price for limit buys (3% below for sells)

Stop-buy and stop-loss orders

Your price was too close to the current price

The purpose of a stop order is buy or sell shares if the price changes. If you want to buy or sell shares at the current price, you may be looking for a limit or market order. If you place a stop order for too close to the current price, it'll be considered a mistake and immediately rejected.

Stop-loss orders

The price you enter when placing a stop-loss order must be at least $0.05 below the current Best Bid. Basically, your stop-loss order needs to be placed for at least $0.05 lower than the highest price an investor is currently willing to pay for the shares. You can see the current bid for any shares on Yahoo finance.

Stop-buy orders

The price you enter when placing a stop-buy order must be at least $0.05 above the current Best Ask/Offer. Basically, your stop-buy order needs to be placed for at least $0.05 more than the lowest price an investor is currently willing to sell their shares for. You can see the current ask for any shares on Yahoo finance.

Note: Bid and Ask/Offer prices can change second by second so it's always best to avoid placing stop orders for prices too close tot he current price.

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