Stop Orders and Limit Down

Y

ysettle

Stupid question but - what is the harm of putting stop orders in right ahead of where the limit down will be and then placing reverse buy orders in case they reopen - worst case seems to be that that you get whipsawed for a point or 2 (ie (place sell stop at 2174 and buy stop at 2178) but if/when the market gets halted - you have almost unlimited upside thru your short????

Would it ever be possible for futures to re-open 30 or 50 points higher or would they automatically re-open where they left off??
 
I find, in my experience, that any question that starts with "Stupid question but" has flaws but you don't want to recognize them. Instead of "what is the harm of putting stop orders in right ahead of where the limit down", where do you profit from that on a consistent basis? And, what do you mean by " placing a reverse buy order." And what asset class and symbol are you discussing?
 
if limit down in 2173 - and my stop is at 2174 assume I sell 1 emini at 2174...I would have a buy-stop order placed at a price saying 2180....when the market is trading limit down, i can still get a sense on where the market is intrinsically trading thru the VIX futures, and it seems that my worse case scenario is if/when futures reopen - my buy stop gets taken out and i lose 6 point on my emini trade but while its limit down - my upside is almost unlimited

Any other suggestions on how to potentially profit from a limit up/down market?
 
It is my understanding that when a future is limit down, it does not stop trading like stocks. You just can't do any trades below the reference price. The future can trade up. It just did that.

ysettle said:
if limit down in 2173 - and my stop is at 2174 assume I sell 1 emini at 2174...I would have a buy-stop order placed at a price saying 2180....when the market is trading limit down, i can still get a sense on where the market is intrinsically trading thru the VIX futures, and it seems that my worse case scenario is if/when futures reopen - my buy stop gets taken out and i lose 6 point on my emini trade but while its limit down - my upside is almost unlimited

Any other suggestions on how to potentially profit from a limit up/down market?
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ysettle said:
I sell 1 emini at 2174...I would have a buy-stop order placed at a price saying 2180
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So, your strategy is to sell at 2174 and to buy back at 2180? That's a guaranteed loss of 6 points.

ysettle said:
Any other suggestions on how to potentially profit from a limit up/down market?
More...

My suggestion is to stay away.
 
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ysettle said:
... my buy stop gets taken out and i lose 6 point on my emini trade but while its limit down - my upside is almost unlimited

Any other suggestions on how to potentially profit from a limit up/down market?
More...

Don't try to profit on a limit move. It can and will spectacularly blow up in your face if you get it wrong.

In tonight's case, you could not sell at 2174, because that is the limit down. You could, however, buy at 2174 and be long for X points.

If you got a bounce, like you did tonight, YAY! But if the market stayed limit down, and opened tomorrow RTH with another 50 point drop, your long would be down, well, 50 points.

The futures do not always bounce away from limits before RTH. If they do, nice. A reasonable target can make you monies. If not, sad.
 
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