Relative (a.k.a. Pegged-to-Primary) orders provide a means for traders to seek a more aggressive price than the National Best Bid and Offer (NBBO). By acting as liquidity providers, and placing more aggressive bids and offers than the current best bids and offers, traders increase their odds of filling their order. Quotes are automatically adjusted as the markets move to remain aggressive. For a buy order, your bid is pegged to the NBB by a more aggressive offset, and if the NBB moves up, your bid will also move up. If the NBB moves down, there will be no adjustment because your bid will become even more aggressive and execute. For sales, your offer is pegged to the NBO by a more aggressive offset, and if the NBO moves down, your offer will also move down. If the NBO moves up, there will be no adjustment because your offer will become more aggressive and execute. In addition to the offset, you can define an absolute cap, which works like a limit price, and will prevent your order from being executed above or below a specified level.
If you submit a relative order with a percentage offset, you are instructing us to calculate an order price that is consistent with the offset but that also complies with applicable tick increments. Therefore we will calculate the order price rounded to the appropriate tick increment (e.g., pennies for a U.S. stock trading at a price over $1.00). Buy orders will be rounded down to the nearest acceptable tick increment and sell orders will be rounded up.
To place a Relative Buy order from the Mosaic Order Entry panel:
- Enter or select a symbol and then click Buy
- Set the order size and select REL as the order type
- Enter a maximum value in the price limit (LMT) field
- Enter an offset amount, the amount added to the National Best Bid
- Complete the order parameters
- Hit SUBMIT.
Find out more on the Relative orders page of the IBKR website.