StockFetcher Forums · General Discussion · ORDER EXECUTION & ROUTING<< 1 2 >>Post Follow-up
shmoyer
18 posts
msg #40037
Ignore shmoyer
1/7/2006 2:27:33 PM

Any opinions or advice on evaluating a stock purchase, day trades {not scalping}, as regards to whether market or limit order should be used. The dilemma is do you choose a limit order to get the price but risk not getting filled or do you go for a market order to insure a quicker execution? Additionally, how should one factor in the routing that a particular broker might choose to use? To further quantify 75% of my picks are NYSE with the remainder NASDAQ and are stocks over $50 with a minimum purchase of 1000 shares.


limestar
79 posts
msg #40040
Ignore limestar
1/7/2006 9:09:11 PM

Most of my stuff is market orders because I want to own the stock when I want it.

Limit orders on high volume stocks trading over $50 shouldn't have very large spreads. Have you experiemented between the two on the stocks you trade and found the spreads to be so large they actually make a difference?

Alot of people playing the ultra scalper trades ala TRO probably use limit orders, but I look for 4+ dollar moves in stocks and my entry within .50 is typically not something I squabble over very much.


shmoyer
18 posts
msg #40059
Ignore shmoyer
1/8/2006 7:49:45 PM

I typically use market orders also for the same reasoning...the fill is more important than a difference of a few cents. I just wanted to see if thee was a difference of opinion . If you don't mind me asking, what broker do you use? My current broker was bought out by e*trade and I'm not sure I want to stick with them.


EWZuber
1,373 posts
msg #40061
Ignore EWZuber
1/8/2006 11:42:40 PM

shmoyer, for daytrades I believe it is best to use a limit set at the ask,and to exit use a market order.
The rationale being if you are getting a buy signal you need to get in asap and not risk missing your entry by trying to save a couple pennies and get in at the bid and maybe not get a fill at all. Fills get less frequent at the bid because when accumulation begins trades typically happen at the Ask.
A market order at the exit because when you get a sell signal you want to get out right away before the price drops significantly.When the stock goes into distribution trades typically occur at the Bid so odds of getting a fill at the Ask have decreased significantly.


nikoschopen
2,824 posts
msg #40070
Ignore nikoschopen
1/9/2006 4:30:32 PM

Conventional wisdom dictates that you use a market order in a sink-or-swim situation. After all, does one or two cents matter when the market is about to crack under? That's equivalent to $10 or $20 for every 1000 shares traded. Hardly a pocket change in my opinion compare to what you can lose, or is it? But this doesn't bode well for a small cap stock like BCSI, with the spread of .25 or more, unless your definition of pocket change shares the same perk as Bill Gates. But then the irony is that your limit order for those small cap highflyers will probably land you in a poorhouse because your stop never gets hit, courtesy of your fondness for the limit order. The only conclusion this coarse palatte can draw is that it's an irony.


EWZuber
1,373 posts
msg #40085
Ignore EWZuber
1/10/2006 12:13:01 PM

nikoschopen
I don't understand what you are trying to say. I advocate a limit at the Ask instead of a market order to prevent a market maker from filling you at a higher price or amarket anomoly from fillingyou higher.

I don'tunderstand what you mean by "...But then the irony is that your limit order for those small cap highflyers will probably land you in a poorhouse because your stop never gets hit..."

A limit at the Ask will fill instantly.

My philosophy about low volume small caps with a huge spread is I don't mess with them. More trouble than they are worth, too difficult to get out of them at a decent price.


nikoschopen
2,824 posts
msg #40096
Ignore nikoschopen
1/10/2006 3:56:21 PM

EWZuber sez "I don'tunderstand what you mean by '...But then the irony is that your limit order for those small cap highflyers will probably land you in a poorhouse because your stop never gets hit...'"

More often than not, in a fast moving market (and this is always the case when an important support or resistance line is breached) where the spread is ridiculously wide, ure limit order will be left untouched. This can also happen when the damn stock either gaps up or down and never looks back.

EWZuber sez "A limit at the Ask will fill instantly."

Again, it ain't so easy to catch the ask in a rapidly moving market. The order queue is so cluttered up with orders coming in from all directions, to think that ure order will automatically be executed is an illusion. Before the burst of the Internet bubble, routing orders using various methods involving Selectnet, SuperSOES and the fragmented ECNS would have shaved a few seconds from your order ticket. Nowadays, with the merger of the ECNs and improved technology, there isn't much you can do to gain leverage over ure newbie brethrens.

In my previous post, my focus was on the possible repercussion of exiting the wrong trade via limit order than on the payoff from entering a would-be right trade, which other posters seemed to have overemphasized.


EWZuber
1,373 posts
msg #40098
Ignore EWZuber
1/10/2006 4:16:31 PM

nikoschopen, I wasn't talking hypothetically. This is what I do and I do get instant fills with a limit on the Ask, always. I use Interactive Brokers, an ECN.


nikoschopen
2,824 posts
msg #40102
Ignore nikoschopen
1/10/2006 4:48:44 PM

Well, I too use IB as one of my brokers. But, truth be told, there are times when my limit order at the ask gets bypassed, especially when the stock is suffering from hypermania. Hence I have kept to the rule that if I'm to get in, I need to buy (at the ask) or sell (at the bid)-- which amounts to buying or seling using a market order -- at least 15-seconds prior to when I "think" the stock will blast off. Of course, my assumption is all hypothetical (pun fully intended *wink wink*)


EWZuber
1,373 posts
msg #40123
Ignore EWZuber
1/10/2006 10:56:54 PM

I can't see how that could be unless you are making odd lot limit orders or huge blocks. It's all electronic there is no MM to overlook your order. Are you using SMART routing or specifying a certain path?
And as I said I get fills instantly each and every time without exception.
I took this particular part of trading discipline from a book written by a very successful day trader.



StockFetcher Forums · General Discussion · ORDER EXECUTION & ROUTING<< 1 2 >>Post Follow-up

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