There is really no reason to ever use a market order. We get price improvement on about 25% of our listed trades when not using NX, using limit orders. Market orders are generally a rather foolish mechanism (by definition).
Shorting on the NYSE
- Thread starter gh1
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Don
There have been quite a few different discussions on this. When I am trading momentum I will use market orders when I can measure that the momentum will last for greater than 5 minutes. That type of momentum limit orders won't be filled on the NYSE. On NASDAQ you would actually have to use selectnet to hit a market maker heavily away from the market.
Market orders/limit orders both have benefits and drawbacks. It depends on the situation. The strategies you teach your traders it doesn't usually make sense for the market order. There are quite a few times I would have never been able to trade if not for market orders.
Robert Tharp
There have been quite a few different discussions on this. When I am trading momentum I will use market orders when I can measure that the momentum will last for greater than 5 minutes. That type of momentum limit orders won't be filled on the NYSE. On NASDAQ you would actually have to use selectnet to hit a market maker heavily away from the market.
Market orders/limit orders both have benefits and drawbacks. It depends on the situation. The strategies you teach your traders it doesn't usually make sense for the market order. There are quite a few times I would have never been able to trade if not for market orders.
Robert Tharp
Your points are, of course, valid. The point I am trying to make is: Since the NYSE Specialist is the only person who can execute market orders (thus causing them to be "batched" - which can take some time), when limit orders can be executed quickly by the NYSE clerk, we recommend that our traders use limits "past NBBO" pricing to facilitate the trades more quickly. Since we generally get price improvement anyway, it gets the job done a bit more quickly in most cases, and the pricing is usually better.
Market orders on the NAZ are a whole different story, as you well know.
Market orders on the NAZ are a whole different story, as you well know.
I admit to not being that expert on listed trading. However, is there any circumstance short of an all out panic exit that would cause you to use a market order, particularly on a thin stock? Chasing momentum? I think you will almost always get filled at the end of the move. It's not always the fault of the specialist, there could just be an air pocket. Who wants to sell when it is obvious the price is rocketing higher?