Market vs. Limit Orders


September 13, 2016

Trader Scott’s Market Blog

This article from Zero Hedgeshould be a warning for all of us. I personally never use market orders to enter a position, only to exit one (profit or loss). When we do the right thing and sell winners into strength, we seem to often see our market orders executed above what the price was when we originally entered the order. And on the flip side, when we’re selling a loser into weakness, it’s the reverse. But understand that we actually may be doing the “right” thing by getting out of that loser. That’s just part of the business of trading. I use market orders in this fashion, because as a floor trader/market maker for 10 years, I know the games (completely legal and legitimate BTW) that are played by the market makers. I did it myself. So I don’t want to get screwed on my entries into markets. Remember we’re going from a “no-RISK” situation by being out of the market. So we’re in the drivers seat in that situation. When we go in, then we’re at RISK. Be patient. Take advantage of it. One little way is by using a limit order. And putting that limit order at the SUPPORT zone, (or below it, which is my preference), lowers our RISK even more. But when we’re already in a market, then we are already at RISK. We never want to get cute with RISK. If, for whatever reason, we want/need to sell, just do it. Don’t get cute. Even if it means getting screwed on our market orders. We’re moving from being at RISK to “not being at RISK” in the latter situation. There are a lot of nuances about markets. Our focus in markets should always be centered on RISK. This is just another part of it.


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img_0074bwcrsmTrader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.

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