How best to enter trades using limit orders?

[Wizard Trader]

I'm a bit worried that if I use a limit, instead of a market order, that the order won't be filled. Surely it's possible that the price can suddenly take-off in the other direction, leaving you in the dust...

How exactly do the professionals use limit orders to enter a position?

Thanks in advance for any help!

 

[HowardCohodas]

I'm a bit worried that if I use a limit, instead of a market order, that the order won't be filled. Surely it's possible that the price can suddenly take-off in the other direction, leaving you in the dust...

How exactly do the professionals use limit orders to enter a position?

Thanks in advance for any help!

I would not consider my self a professional, however I use limit orders all the time when getting into a trade. There is a price at which my trade makes sense to me. If I don't get my price, no sweat. Another opportunity comes along frequently.

It's better to be on the ground wishing you were in the air than in the air wishing you were on the ground.

Takeoffs are optional. Landings are manditory.

 

[Wizard Trader]

Thanks for the reply HowardCohodas.

Say I want to enter the market at the present price or better, isn't it better to use a limit? If so, how?

 

[HowardCohodas]

Say I want to enter the market at the present price or better, isn't it better to use a limit? If so, how?

The "mechanics" of entering a limit order are different for different trading platforms. When I first started, I got on the chat window with someone at the firm and we went through it step by step.

Don't forget that limit orders can be used whether you are going long or short. So "at or above" or "at or below" or ... are formulated to help you achieve your goals.

 

[Wizard Trader]

The "mechanics" of entering a limit order are different for different trading platforms. When I first started, I got on the chat window with someone at the firm and we went through it step by step.

Don't forget that limit orders can be used whether you are going long or short. So "at or above" or "at or below" or ... are formulated to help you achieve your goals.

My understanding is that a limit order basically means "at this level or better" and a stop means "at this level or worse".

You sound like you have a lot of experience using trading platforms. Personally I just log into my IG Index spreadbetting account using a basic webpage; no special software. As for charting I simply use freestockcharts.com.

What's the basic strategy behind executing limit orders? Is it basically a probability game?

 

[HowardCohodas]

What's the basic strategy behind executing limit orders? Is it basically a probability game?

The strategy behind using limit orders is to assure that I get a price that fits my trading model. Nothing more.

Now, the price that fits "my model," or anyone's model, depends an a host of issues, probability being one, but not the only one.

Limit orders are a tool for me, not part of any strategy.

 

[Wizard Trader]

As a beginner, the way I'd think about executing a limit order is to place it 1 pip away from the current market price; the probability being that it will be filled, and simultaneously place a stop, near to the other side of the market price, just incase it doesn't get filled; further way than 1 pip though.

 

[timsk]

Hi WT,
This FAQ doesn't exactly answer your question, but it does provide a few examples with a chart and may help to put a little more flesh on the bones: What's the difference between Stop Loss and Limit orders?
Tim.