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I recently discovered I needed a new order type that was more efficient than entering limit-orders and waiting to get filled.
I've been working on some new strategies and I discovered the need to get an order filled as the market was moving with momentum based on a projected price target I had in mind.
If current price is at 2760.00, and I anticipate it to get to say 2768.00, IF it gets up from being stuck at 2760.00, say 2762.00 is my ideal buy, then would a Stop-Buy be the basic strategy to catch it on the upswing? (Stop-Market vs Stop-Limit is a separate debate, I just want something that doesn't require the price to drop back down in this scenario).
Yes a stop market order. So the first contract to trade at 2762.00 will trigger a market order to buy at the best available price. On a thicker instrument like the ES that will probably get you filled at the stop price unless you are trying to enter a tick or two above an obvious line of failure where there is the potential for a flurry of buy orders as stops are hit from the traders that were short.
You could always be sure to get your price by using a stop limit order. You don't want to use those for a stoploss as everybody generally warns against, but especially on thicker instruments you should almost always get filled except for the rare occasion when price suddenly flushes through your entry area and you get left behind. Though if the flush was unexpected you might be better to reassess anyway. On thinner instruments a stop limit might mean you end up getting left behind too often depending on your entry method.
"You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade" - Gary Norden
Thank you so much for your detailed reply, you were a great help.
I am finding myself in new trading situations now where regular limit-orders are a bit awkward, this is perfect.
And thanks for your patience, I realized through reading that this was probably what I wanted and that I can experiment in sim but I thought best to ask the community as well in case there were other considerations I was missing.
A pleasure. One thing to be aware of with sim is, depending on the platform, it may always simulate your order being filled at the stop price. In reality as said there might be occasions when in real life you would get slippage or the order wouldn't fill on a stop limit as price goes through it quickly without backticking enough contracts to reach your order in the queue.
(This isn't a problem for most people except if one is only intending to scalp for a tick or two and they have been sim trading with a platform that fills straight away making loads of sim money, then they go live and find they are losing real money).
"You do not win as a trader, you just get to play again the next day. If that game doesn’t appeal to you then you should not trade" - Gary Norden
I have been using the CME simuluator, there are times when my working orders do not get filled, just this past Friday I actually didn't get filled on /ES when the price hit my working order price which makes me hopeful that they've built some semi-realistic queueing. Its a bit buggy but overall its a decent sim. I am all too familiar with the simulator making trading seem so simple though.
