"Use Limit Orders"

kmiklas said:
..only to helplessly watch as the price hovers one penny away from your limit order, rockets in the other direction, and the opportunity is missed. ;)

If I want to get in, long or short, I buy in. If I want out, I get out.
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If a trade is good in your mind then it is silly to miss it for just a penny....
 
optioncoach said:
If a trade is good in your mind then it is silly to miss it for just a penny....
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Exactly, and if you really want to get in then market orders can be a good option because you can never know how far the price will go down/up before reversing.
You can set a limit order and the price can touch it and move the other direction without you getting filled.
 
RDK91 said:
Exactly, and if you really want to get in then market orders can be a good option because you can never know how far the price will go down/up before reversing.
You can set a limit order and the price can touch it and move the other direction without you getting filled.
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You can also end up paying $199,999.00 for a $2.00 stock with a market order. All it takes is one "flash crash" or "flash dash", and your entire net worth can be vaporized. You can probably get such a trade busted, but why take the chance? Bust rules can be arbitrarily applied, potentially to your disadvantage (just ask the guy on ET who went bankrupt on May 6, 2010 due to asymmetry of the bust rulings that day, even though his actual trades were tremendously profitable).

Pure market orders were designed for the specialist system back when humans manually processed all trades. Island, the basis for most modern equity stock markets, didn't even allow market orders. I'd suggest that you use a marketable limit order instead -- it could save you your entire net worth.
 
Like others said, I just use marketable limit orders( limit above the ask when buy, limit below bid when sell). My stops are limit stops( stop activation price and limit is lowest price I want to accept).

I just view it as a safety to something stupid in the market happening.

For instance last year AUG 24th without my limit stops I would've been one angry trader. As a swing trader who holds a few days to few weeks , I don't get to watch markets at opening most days from my computer as I work.

I just have my stops, some alerts of when my price hits the stop so I know their wasn't some gap over my limit that I had to deal with.


That day I had a few positions on and watched the market and put on some trailing stops throughout the day and managed to get out at close with some small losses/ scratched trades.

I had never seen anything like that myself at the time and didn't feel like seeing what the next day would be like lol. Without limits I would've took on some major losses.
 
kmiklas said:
A few months back, after some research, I stopped using limit orders. As a Computer Programmer, I am well aware of how easily algos can be run to manipulate a price against standing limit orders (think 0+ algos and their relatives). That's a game that I can't win.
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Personally I think you should be using limit orders because your algo fears are somewhat paranoid (in this specific context, that is). However, if you still insist, you can use stop-limit or limit if touched orders to go market but control the slippage.
 
if the Algos could mess with everyone's orders at will there would be no market. Algos are basically market makers, they're good for the business, but at the same time are not perfect.

The market will go where the market wants to go regardless of algos, you, me, or anyone else. Pick good spots to trade and you won't have to worry about anything.
 
Using limit orders is playing defense (smart), and defense supersedes offense in my world of trading. Don't care if it's .01 or .05, no exceptions.:cool:
 
Some strategies require using market orders and some require limit orders and some require stop or stop limits or a combination of all the above. The strategy should have long considered the risks and probabilities before the trader ever goes live.
 
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