Do you put limits on exit orders?

The situation depends somewhat on what market you're trading. If you're talking about US equities, there is no reason to put in market orders. Current US equity markets are based largely on the original Island ECN, which didn't even allow market orders. The exchanges bought Island and similar ECN's, and patched in what the (clueless) investing public wanted -- "market orders". But now you take a huge risk every time you submit one.

With a market order, you may buy at $199,999.00 or sell at $.0001, regardless of the true value of the stock. Trades at such prices go through more frequently than you might think. If you're on the wrong side of this, you'll likely get the trade busted (if you act in time), or you may not. If you put in an appropriate limit price on your order, even if it's an executable price, then this problem goes away.
 
paglos said:
Dear all,

I am developing an automatic trading system and I put limit on entry orders. But I don't do the same on exits as I think I need to exit as quick as possible. But I noticed my slippage is quite big on trades as much as 100 % excess of my calculated returns.
How do you handle exits? what is be best approach? I am thinking put limits then if not filled after a certain time cancel it and send a market order ?
Thanks for reading.
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paglos said:
Dear all,
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Pretty much all of the above,PaPost;
except NO penny stocks,+ buy/sell stuff liquid enough to use a market order, or generous limit.Market order is a risk, BUT with good liquidity its a good risk- reward.Of course with low liquidity+ HI leverage like some buy real estate, could be more than 100%slippage or even forclosure'+ defficiency balance lawsuit.Wisdom is profitable to direct.
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