Strategies to adopt when Market reverse on a scalping position

The Snip€r

Junior member
11 0
Hi guys,

You enter in a scalping position, few seconds later the stock reverse.

Considering for some reasons you don't want to wait your stop to be hit, what is the usual order type you scalping guys are using in this very instant ? Market orders ? Or do you still try to place a limit order or something ?

Thanks for your sharing.

(Been a long time i did not post here so a big hug to all of you btw ! ;)
 

rossored

Senior member
2,070 43
If your stop is in the right place, then you have to make a commercial decision to either a) allow the stop to be hit and accept at that point that you are wrong or b) you reverse your position or c) you close the position before the stop gets hit. Market orders are going to be fastest and take you out at the price you submit it. A limit is only going to be effective at a certain price.
 

The Snip€r

Junior member
11 0
Thank you for this answer !

What do you call "to reverse your position" to avoid any further misunderstanding please ?
 

rossored

Senior member
2,070 43
If you're short, reverse and go long if you think it's going to go against you or vice versa?
 

The Snip€r

Junior member
11 0
Okay.

In those situations ( reverse) do you still try to place a limit order or do you go market without hesitation ?
 

rossored

Senior member
2,070 43
Each situation is different. You don't often have a lot of time to decide what's best and maybe there is no best. If your train is leaving the station, you've got to decide how much you want to pay to climb aboard. Market orders are going to be filled pretty much right away, but the downside is that you might get a slightly better fill with a limit. Personally, I normally go with market orders and keep my limits for trading within ranges, spikes, exits and situations where I may not otherwise have time to react.
 

NVP

Legendary member
36,291 1,788
if you are wrong you are wrong .....get out as soon as yuor strategy is not working ......regardless of stop loss price

stop losses are just parachutes....designed for if the markets spike and you hopefully avoid a big drawdown off weak volumes and prices taken on yuor exit........but tell that to the Swissie Peg victims

even stop losses are not guaranteed ....
 

NVP

Legendary member
36,291 1,788
If you're short, reverse and go long if you think it's going to go against you or vice versa?

if you are deciding to reverse trades off the back of simply being stopped on the previous opposing directional trade.....I would seriously think again about the system / strategy ..............its strung to tightly
 

rossored

Senior member
2,070 43
I didn't intend to suggest it as a strategy, merely an option for this hypothetical situation. However, there are systems that advocate such a strategy and I for one believe that stop losses are more than just parachutes for spiking markets; they're a way of taking timing and emotion out of your trades, too, i.e the "it's gone past my risk level but it'll come back" strategy. No; just cut it and move on.
 

NVP

Legendary member
36,291 1,788
I didn't intend to suggest it as a strategy, merely an option for this hypothetical situation. However, there are systems that advocate such a strategy and I for one believe that stop losses are more than just parachutes for spiking markets; they're a way of taking timing and emotion out of your trades, too, i.e the "it's gone past my risk level but it'll come back" strategy. No; just cut it and move on.
sure thing - we are all following different horses for courses R.........thats what makes trading so interesting !

N
 

The Snip€r

Junior member
11 0
Each situation is different. You don't often have a lot of time to decide what's best and maybe there is no best. If your train is leaving the station, you've got to decide how much you want to pay to climb aboard. Market orders are going to be filled pretty much right away, but the downside is that you might get a slightly better fill with a limit. Personally, I normally go with market orders and keep my limits for trading within ranges, spikes, exits and situations where I may not otherwise have time to react.

Thanks a lot for your answer rossered !

stop losses are just parachutes....designed for if the markets spike and you hopefully avoid a big drawdown off weak volumes and prices taken on yuor exit........but tell that to the Swissie Peg victims

even stop losses are not guaranteed ....
Are you making a reference to the last january usdjpy flash crash here ?
 

The Snip€r

Junior member
11 0
Okay.
By the way, talking about that flash crash, what would be your recommandation to avoid the trap to be in at this exact bad moment hence not even being protected by the stop loss ?