Conventional wisdom says this is no contest, always, always, always, always always use a Limit Order. Likewise never, never, never, never use a Market Order.
OK, I say that just so you know I've been through the lessons and have absorbed that lesson and had it sink in.After going back through the materials I didn't get a lot on why Limit is better than Market other than that you name your own price with the Limit and get whatever price with Market. Totally makes sense.
In my 3 weeks of trading I'm down a couple hundred bucks and with only a couple exceptions my losses have been exacerbated by not getting the ordering process right. Allow me to illustrate.
Scenario 1: I was watching a stock I wanted to go long on and I had a price in mind ($1.07) that I wanted to buy in. I filled out my Etrade order form with the ticker, quantity, destination and such, I left the type at Market but I didn't hit 'buy' just yet. I waited for the price in the display to go to 1.07 and when it did I hit 'buy' and confirmed the order and in the order window it showed that my order got filled at 1.07. I waited for it to go up and when the display said $1.17 it thought that is about as far as it would go, I hit "sell" and confirmed the order and got the price of $1.17 I wanted. Good trade.
Scenario 2: I was holding a stock at .14 it spiked up to .149, I was hoping for .15 but this was close enough. I put in my info in my Etrade order form only this time I did Limit and I put in my price I wanted .149. When I confirmed the order and it went live the price had dropped to .148 so the order didn't execute. I waited a few minutes to see if it might pop back up to .149 and get filled. But it didn't pop back up, it continued down. .147 .146 .145 Shit. Change the order. new price .145. When it goes live the price is now .144. Ok so this process repeated until I finally got filled at .14 for a break even. Not the trade I was hoping for.
I feel like if I had done a Market order in the above scenario I would have gotten filled at .148, granted not the .149 I was hoping for, but the bigger point is I would have been profitable and I would have been happy with that trade.
My short trading history is littered with stories that are variations on those 2 themes. Bottom line, for me the science is in and Market Orders have kicked Limit Orders ass, which grinds hard against conventional wisdom.
So I'm curious why are my results not keeping with something that is a pillar of the strategy?
Is it possible that you can have a trading style that just works better with Market Orders or am I just doing wrong? I haven't seen the subject of of ordering addressed really in depth, the ordering process seems to get skimmed over a little bit, are there videos to recommend that deal with this subject?
If you want in a stock bad enough to use a market order then you best rethink your trading. LIMIT ONLY. ALWAYS SPECIFY WHAT YOU WANT TO PAY NOT WHAT OTHERS WANT YOU TO PAY
Thanks Kasey21, that's the information I was looking for.
@timothysykes Thanks for taking time with the post.Message received.
Market orders just go through so many hands by the time it finds a seller that you are skinned alive by all the parties involved in the discount online retail broker world. If you want something badly, hit the ask with your limit, if you can't get executed that is not the best sign anyways. Good post though on your thought process!
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