Trading FAQs

A direct public offering, or DPO, is when a company sells its stock directly to the public in order to raise capital. Unlike an Initial Public Offering (IPO), the company selling stock for a DPO self-underwrites their own securities. Because of this, a DPO is immediately available to all public investors and sometimes for a lower cost than an IPO.

An Initial Public Offering, or IPO, is the traditional way a company sells its stock to the public for the first time, primarily to raise capital. In an IPO, the company will use an underwriter to issue pre-market shares to a group of brokerages who allocate them to institutional and individual investors at the offering price (before the security starts trading in the markets). On the day the security starts trading, all investors are able to buy or sell the shares at the price determined by market.

Since this error message appears when the cost of the trade exceeds your available buying power, the simplest solution is to make a deposit. You may also want to reduce your share quantity or limit price.

You can check your existing trading funds any time by selecting Balances. Keep in mind that existing open orders also reduce your buying power.

From the Live Dashboard, select the settings icon, choose All Settings, then Account Settings, and then Option Trading Level.

Keep in mind, to access this you'll need to use a desktop instead of a mobile device. Also, after selecting the option level, you'll need to allow 1 to 2 business days for approval.

Trade orders are rejected for various reasons. To view an explanation for your specific situation from a desktop, log in, go to the Live Dashboard, select Order Status, then Rejected. To view an explanation from a mobile device, log in, select your trading account, choose Orders from the toolbar, then select Rejected.

When a stock split occurs, the number of shares you own increases and the price of the stock decreases, but the total value of your holdings stays the same.

Example
A company offers a 2-for-1 (you get 2 shares for each one you own) or 3-for-1 (you get 3 shares for each one you own) stock split to reduce the price of its stock by increasing the number of shares outstanding.

This action doesn't dilute the percent of the company you own, instead it's used to make the price more attractive to investors, increasing demand and liquidity in the stock.

Learn more about Corporate Actions and find the latest list of major stock splits. It's updated every Monday so you can check back each week to see if any impact you.

When a reverse stock split occurs, the number of shares you own decreases and the price of the stock increases, but the total value of your holdings stays the same. This action does not dilute or increase the percent of the company you own. A company may take this action to meet a minimum stock price requirement to be listed on a stock exchange.

Learn more about Corporate Actions and find the latest list of major reverse stock splits. It’s updated every Monday so you can check back each week to see if any impact you.

You can trade the following securities:

Stocks 
ETFs 
Options (equity and index) 
Mutual Funds 
Fixed Income (corporate, agency, treasuries, municipals, strips & zeros, CDs, and new issues)

A fast market is a market with excessive volatility, which may reduce the likelihood that you will receive the instantaneous fill report at the price you saw when you entered your order. During this time, executions and confirmations slow down, while reports of prices lag behind actual prices. Fast markets are usually due to events such as news on a specific underlying security or economic announcements that affect the overall market.

While the offering price of the IPO may give some indication, the price may be much different than the price of the IPO, once it begins trading on the secondary market. After a period of market price discovery, a stock will usually establish a trading range and volatility will commonly decrease.

Each exchange has its own process to determine if and when options will be listed to begin trading. In the case of a highly anticipated IPO, this may be as soon as a week, but can be longer.

If you have positions that are in the money, it's crucial that you monitor your account and communicate with us on expiration. There are a few options if you have positions that are expiring in the money:

• You can close the option position
• You can leave the position open; however, if it's in the money, you must have sufficient buying power in the account to handle the exercise
• You also have the ability to place a Do Not Exercise on long, in the money options. In this case, you will forfeit any remaining premium, but you will not incur the normal risk of taking a position over the weekend. In order to do this, you must call us on option expiration at 1-855-880-2559

Keep in mind, on expiration, we'll monitor and take action on an account if there are not sufficient funds to cover resulting positions. This can include closing out your option positions, entering a do not exercise or closing stock positions in the after-hours market to cover any resulting positions. If you don't want to have your position closed, you must contact us with your intentions with the position, and we'll make our best efforts to comply. Usually, we'll allow clients to take action in their own accounts by 3:00 PM ET if we're alerted in a timely fashion.

If we have to take action above the normal course of action, we do charge a $100 options management charge plus regular commission.

Also, if you are assigned or exercised on positions over the weekend that you don't have funds to cover, we may take action on Monday to close positions.

Ally Invest receives payment for order flow from certain market centers. This payment is used to offset the costs of doing business and ultimately helps to reduce the overall cost to Ally Invest customers. For more information, view our Order Routing and Payment Order Flow Disclosures.

Fractional shares of stock will be automatically liquidated when an order to sell the whole number of shares is filled in its entirety. You must close the entire position before the fractional shares will be liquidated. If you have a leftover fractional position and would like to liquidate it, please call us at 1-855-880-2559.

Unfortunately, Ally Invest does not support autotrade programs at this time. All orders must be placed by the investor as we cannot accept trade instructions from a third party.

If you're expecting to receive a dividend soon, or one has recently been paid, the amount will have a “D” icon next to your symbol in the Holdings section on your account dashboard.

If you're on a mobile device, select your investment account, then go to Holdings.

You can also find dividend payments in Activity.

You can use a cash account to day trade as often as you want up to the start-of-day settled funds in the account. If you use unsettled funds for any part of a purchase, the entire purchase is subject to Regulation T settlement rules.

Yes. Ally Invest honors the national best bid or offer (NBBO) on market orders as well as marketable limit orders.

A hard-to-borrow fee is an annualized fee based on the value of a short position and the hard-to-borrow rate for that position. The fee is charged on a pro-rated basis depending on how many days you hold the position short. It will be assessed to your account daily from settlement through settlement. Finally, if you open and close a short stock position intraday (not held overnight), you will not be subject to a fee.

Please call 1-855-880-2559 with any other questions about hard-to-borrow fees.

Example Calculation of a Hard-to-Borrow Fee:
Current price of stock = $11.00
Number of shares sold short = 10,000
Hard-to-borrow rate = 5%
Current industry convention = 1.02

Keep in mind, the current industry convention percentage set by the securities lending market participants is subject to change.

(market price of stock) x (1.02) = Per share collateral amount (rounded up to the nearest dollar)
$11.00 x 1.02 = $11.22 = $12.00

(Per share collateral amount) x (share quantity) = Trade value
$12.00 x 10,000 = $120,000

(trade value) x (annual hard-to-borrow rate) = Annual hard-to-borrow fee
$120,000 x 0.05 = $6,000

(annual hard-to-borrow fee) / (360 days) = Daily hard-to-borrow fee
$6,000 / 360 = $16.67 daily hard-to-borrow fee

Options normally trade in increments of $.01, $.05, or $.10, depending on the value of the underlying security.

The penny pilot allows for trading increments of $.01 for bids up to $3 and $.05 for bids above $3, for each of the symbols in the pilot except for QQQ, SPY, and IWM, all of which trade in $.01 increments.

Yes. You can gift shares to charitable organizations using a taxable account, such as an entity, trust, individual, or joint account.

To gift shares from a taxable account:

• Complete a DTC Free Delivery Request form. Do not complete the "trade date" or "settlement date" fields, as you're not selling the shares
• Have the form notarized, then send it back to us following the instructions on the form
• There's a $25 fee per position, and processing time is generally 3-5 business days

Keep in mind: You can't gift shares through IRA accounts, and you can't make a charitable gift of shares to individuals.

A short stock buy-in and closing trades can occur at any time during the lifecycle of a short position. A buy-in can occur if the stock that has been borrowed is no longer available to be held short. Carrying a short stock position with a negative rate does not protect the position from being bought-in by Ally Invest or our clearing firm at any time without prior notice.

The ticker symbol of the stock you own could change and you’d no longer own that company’s shares once the merger or acquisition is complete.

What this means for you depends on the company’s agreement:

You could receive stock for the other company.
You’ll receive shares for the new company to replace the shares you owned.

A new ticker symbol could be created for the newly-merged company.
You’ll receive a pre-determined number of shares of the new company for each share you owned of the old one. After the merger is complete, the new ticker symbol and share count is reflected in your Ally Invest account.

Cash is part of the merger or acquisition agreement.
You may also receive cash for the shares you owned, plus shares of the acquiring company or the newly-merged company. That cash will be automatically deposited in to your Ally Invest account the day the merger/acquisition is complete.

What else you should know
Sometimes you may be unable to trade shares of companies involved in a merger or acquisition the day the announcement is made. You may also be unable to trade the new company’s shares on the day the merger is completed or goes into effect.

Learn more about Corporate Actions and find the latest list of major mergers and acquisitions. It’s updated every Monday so you can check back each week to see if any impact you.

If your fractional shares are liquidated as part of an execution for a whole number of shares, you will receive the same price for the fractional liquidation as you did for the whole number of shares that were executed.

In cases where the whole number of shares are filled in multiple executions at different prices, but are part of the same order you will receive the average price of the whole shares for the fractional share liquidation.

If you liquidate fractional shares only, you will receive the closing price of the stock for the day the request to liquidate was received.

In a situation where a stock is no longer trading, you will need to fill out a Worthless Security/Penny for the Lot form to remove the worthless security from your account. Once you log in, go to More and then choose Forms to download the form. You can fax your completed form to us at 1-866-699-0563, or upload to us once you log in. There is a $30 processing fee. If the security can't be removed as worthless, we'll notify you by email, and no charges will apply. When a security is removed as worthless, it will be processed for a net credit of $0.01. The activity will appear in your Activity and on your account statement. A trade confirm for your tax records will also be generated.

When you select an investment objective, it helps us understand the primary strategy and purpose for your account.

A day trade occurs when you open and then close the same stock or option position on the same business day. For example, you purchase 100 shares of MSFT at 10 am on Tuesday and then sell 100 shares of MSFT at 3 pm on Tuesday. It’s also a day trade if you were to sell short and then buy to cover the same stock in the same day. Finally, any trades executed during the pre- and post-market will also count towards a day trade on the date of execution. Any position held overnight will not be considered as part of a day trade.

If you would like to trade more frequently, you can consider adding margin to your account. Review our Margin Trading FAQs to see how trading within a margin account differs from that of a cash account.

Some of the common factors that determine best execution include, but are not limited to: current market conditions, speed of execution, size and type of order, the number of available primary markets for a particular security and volatility.

We place your order on your behalf and decide which market center to route the order to.

Yes. As a measure to help protect our clients, Ally Invest will only allow limit orders on the day the IPO is expected to begin trading. Because of the inherent volatility of IPOs, market orders will not be accepted, and margin may not be used. Only after the stock has undergone a period of price discovery and exhibits an established trading range will Ally Invest review and, at our discretion, reduce order requirements. IPOs are non-marginable for the first 30 days. Additionally, only cleared funds will be available to purchase recent IPO stocks.

No. Ally Invest doesn't offer direct access to IPOs. Normally, the only way to receive shares in an IPO allocation is to have an account with an investment bank that is a member of the underwriting syndicate. Even then, shares are usually reserved for their large institutional clients.

Yes, but only if shares are available to borrow. In many cases, recent IPOs have a small number of outstanding shares, which can make it difficult for brokerages to locate shares to borrow (especially if it is a highly anticipated IPO). Additionally, borrowed shares may have a high hard to borrow fee, in which case Ally Invest may not accept orders to sell short.

This is a distribution of a portion of a company’s profits to its shareholders. The payment is typically made in cash, and paid regularly (usually quarterly) to shareholders as of a certain date (the ex-dividend date).

Learn more about Corporate Actions and find the latest list of major dividends. It’s updated every Monday so you can check back each week to see if any impact you.

Yes. For execution of certain single listed index options, we pass through exchange fees of $.35 per contract, in addition to the regular commission.

ACH Transfers

If you transferred from another Ally account, you can use the funds to trade immediately. If you transferred from another institution, there’s a 3-business-day hold on initial transfers.

Wires

Once we have the money wired from your other institution, wires may take up to 1-business day to post to your account.

Checks

If you mail us a personal check, there’s a 3-business-day hold from when we receive it.

Cashier's Checks

If you mail us a cashier’s check, the funds are available to trade as soon as we receive the check.

We charge a $4.95 base commission and a penny per share when trading stock valued below $2. The maximum commission generally doesn’t exceed 5% of the trade value. View our Commissions and Fees for more detailed information. We also require a minimum opening purchase of $100 per order on OTCBB and Pink Sheet stocks.

The price of a security, such as a stock, is determined by supply and demand, which, in the stock market, translates into bid and ask prices.

The nature of this system is that sell orders are filled at the bid price, which is the highest price that somebody in the market is willing to buy at the security you want to sell, while buy orders are filled at the ask price, which is the lowest price somebody in the market is willing to sell at the security you want to buy.

The difference between the bid and ask price is known as the spread. This is the amount market makers earn per each share on each trade. So, bid is the price one can sell at, ask is the price one can buy at

This is an annualized fee charged by clearing firms when you’re holding a short position on a hard-to-borrow security.

Yes. Extended hours trading is available at Ally Invest. You may enter pre-market orders between 8:00 am – 9:30 am ET or post-market orders (also called after-hours orders) between 4:00 pm – 5:00 pm ET. On days when the market closes early, the extended hours trading session runs from 1:00 pm – 2:00 pm ET. You may enter limit orders only. An order placed during an extended hours trading session is only good for that session. If your order is not executed during a specific extended hours session, the order expires at the end of the session and does not roll into the next traditional or extended hours session. You may cancel an order that has not been executed before the close of an extended hours session. For settlement and clearing purposes, orders executed during an extended hours session are considered to have been executed during the day's traditional session. Please refer to the additional disclaimer for extended hours trading.

The availability of stocks that can be sold short varies depending on several factors, including high demand, small float and increased volatility of the particular security. This makes them known as hard-to-borrow securities. In some cases, a hard-to-borrow security may be available to sell short, but only for an added fee known as a hard-to-borrow fee or negative rebate.

Ally Invest is charged a local settlement fee of about $50 when trading an over-the-counter foreign stock. Ally Invest passes this fee, in addition to the regular trading commission, to its clients with no mark-up. Over-the-counter foreign stocks are typically represented by a 5-letter symbol ending in F. Foreign companies listed on US exchanges, most commonly ADRs (example: Nokia - NOK, and Sony - SNE) are not subject to this fee. Keep in mind, when you transfer foreign stock into an Ally Invest account, an incoming transfer fee of $50 per position applies.

Ally Invest does not permit opening transactions on these foreign securities ending in the letter F.

Once you fund your Ally Invest Securities account and the deposit clears, you can begin trading. Once you log in, select Quick Trade on the account you’d like to use.

Ally Invest offers many U.S. based mutual funds, load and no-load. Clients have access to thousands of funds through over 500 fund families.

We don’t charge commissions on any options trades, but there’s a 50¢ per option contract fee charged.

Ally Invest will allow limit orders on the day the IPO is expected to begin trading. Orders would be eligible for execution once the stock begins trading in the secondary market.