Order Types

[Alice]

I am slightly confused about different types of order.

If I want to go long at a level which is above current market price or short at a level which is below current market price, should I place a stop order or a stop limit order in the market ?

Which of these ( if any ) would give me the best chance of being filled at my stated price ?

 

[TheBramble]

Stop Order
A buy stop order is placed above the current market and is elected only when the market trades at or above, or is bid at or above, the stop price. A sell stop order is placed below the current market and is elected only when the market trades at or below, or is offered at or below, the stop price. Once the stop order is elected, the order is treated like a market order and will be filled at the best possible price.

Stop Limit Order
A stop limit order lists two prices and is an attempt to gain more control over the price at which your stop is filled. The first part of the order is written like the above stop order. The second part of the order specifies a limit price. This indicates that once your stop is triggered, you do not wish to be filled beyond the limit price.

 

[rog1111]

Alice

A stop order will become a market order once your price is reached, therefore you'll get filled but may get slippage of any size. With a stop limit it depends how wide a limit you specify, the narrower the limit eg 0 pips, the less likely you'll get filled, all depends on how fast things are moving, so to ensure a fill you could make the limit quite wide. For Globex futures stop limit orders will be native to the exchange, and stop orders resident on your brokers server (in the case of IB). It's six of one and half a dozen of the other really, but I've found stop limits with 2 pip limits quite effective for GBP, only a couple of times missed out.

rog1111

I am slightly confused about different types of order.

If I want to go long at a level which is above current market price or short at a level which is below current market price, should I place a stop order or a stop limit order in the market ?

Which of these ( if any ) would give me the best chance of being filled at my stated price ?

 

[TheBramble]

Maybe I should also have mentioned that you probably don't want to use a Stop Limit to Exit a position - only for Entry.

 

[wisestguy]

better watch out for order terminology , they seem to vary from institution to institution . certainly I know there is a difference between the futures and SB industry as far as terminology goes.

just make sure they know precisely what you mean , and keep the explanation simple .