Lots of long term investors place limit orders well away from the market on a gtc order.
This sounds like a IB thing. I have never had a limit order be rejected on TradeStation, but then my execution code usually doesnt place them unless the market is reasonbly near my target price to avoid chewing up buying power. You might try checking the last price/bid and avoid issuing the order if the market is nowhere near your price. I once had a MARKET order be rejected because there was no market. Good thing too, I would have hated for the trade to execute for a penny.
