Volatile Markets Message

What are volatile markets? A volatile market is a high-volume trading session marked by extreme price fluctuations and order imbalances resulting from numerous investors entering buy or sell orders for the same security simultaneously. Because of these imbalances, wide price variances in short periods of time are common. On any given day, volatile markets can affect a particular security, groups of securities or the market as a whole. Volatile markets can be caused by material news announcements, market developments and even trading halts taking place in less volatile securities. System access, system response times, system performance and trade executions may be adversely affected during volatile market conditions.

There are risks of trading in volatile markets including, but not limited to, the following: Inaccurate or late price quotes, market order execution prices significantly different from the current price quote, delays in trade executions, delays in open order cancellation requests and delays in trade confirmation reporting. Limit orders can eliminate several of the risks associated with volatile markets. A limit order will limit the execution price to the limit price specified or better, whereas a market order will execute at the current market price. Failure to use a limit order in volatile market conditions could result in customers paying more to purchase securities or receiving less on the sale of securities.

Placing cancel requests on open orders means the customer is sending a message to the system, which in turn sends that cancellation request to the exchange. In volatile markets this process can be significantly delayed. Order execution confirmations may be delayed during volatile markets.