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All this discussion about canceling and replacing and whether to do it
or not, could be most misleading to a new trader. So far all that has been
discussed is whether this is wise in one situation, namely whether to replace
an existing limit order to enter at the market. There is however another
situation.
One is already in, has a protective stop in place, and decides he wants
out. Here I see there are basically 3 options:
1. If the stop is tight and you aren't exactly sure you want out, then let
the stop do
its work.
2. If the stop is tight, but you think you can get a better price at the
moment, then
exit, using a cancel and replace.
These are the best two options for a new trader.
3. If the stop has more room, then exit at the market, and then straight
cancel the
stop. This is more dangerous, for the two obvious reasons, 1. the
potential of
the stop still getting hit, and 2. Forgetting to cancel it.
It is noteworthy that even if the entry order is a limit entry, one could
enter using
the approach in option 3, with all its caveats.
Point for new traders is yes clearly there is a very appropriate
situation for cancel and replace
Pete
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