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The type of order depends upon your trading strategy. I daytrade S&Ps using
retracements as the basis for getting into a trade. I prefer to use MIT or
Limit orders to get in. This morning I wanted to short the market at 108450
as the contract traded below this. it moved up quickly to this level before
I could get my limit order in. I therefore decided to get in at the market.
My fill was at 1083, so I placed my stop at 108560 (I always use a stop of
about 2 points). The market bounced a little higher and took out my stop.
As expected, it then headed lower to about 1082 over the next 10 minutes,
eventually getting down to 1072! If I had gotten into the trade at my limit
price, i would have had a nice profit as opposed to a 2+ point loss!!
Gary
-----Original Message-----
From: Simon Townshend <UKTrading@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Friday, August 14, 1998 12:39 PM
Subject: GEN: Enter on Stops ?
>Larry Williams once said that a trader who enters positions on limit or
>market orders is likely to fall into the category of the 80% that lose and
>that winners will almost always enter on stops.
>
>The logic seems pretty clear; if you are stopped into a position at least
>the market is moving your way before you join the move. The downside is
>that you have to risk a little bit more as your protective stop by default
>is further away. That is probably why the 80% (apparently) prefer to hold
>out for their limit orders to be filled which actually is crazy if you
think
>about it as you are then playing the catching falling daggers game.
>
>My day trading profits have only really kicked into being worthwhile and
>consistent since I did two things:
>
>1. Only using a market with a decent daily range where there was room to
>enter on stops without using half the days range to get to my order i.e.
>going into the S&Ps and leaving behind currencies, bonds etc. and,
>
>2. Only entering positions on stops.
>
>One or the other may be the reason I finally cracked day trading, but
>actually I think it was both.
>
>What got me thinking about this all over again is all the discussion
(mainly
>on TV) about the stock market having sold off and people (supposedly
>knowledgeable people) talking about holding out for just a bit more before
>buying these bargains. I wondered if these people were mad or just having
>us on!
>
>Any thoughts?
>
>Simon
>
>
>
>
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