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Stop limits do a very useful thing. You want to be stopped out or into a
position but NO WORSE than XX price. So, if you are electronically trading
e*mini nasdaqs, for example, they sometimes have a lack of orders. If you put in
a simple stop to buy one emini nasdaq at 3793, when the price trades, your order
becomes an order to buy the next contract available 'at the market,' meaning,
wherever it is offered. That could be at 4100 theoretically, if no one else has
sell orders in the system and the next price anyone is willing to sell you a
contract is at 4100. So instead, you put in an order to buy one contract at
3793, stop, with a limit of 3800, meaning that if the next available offer is
above 3800, you aren't interested.
And yes, you might get filled better than your stop...
Best,
Tim Morge
Gram wrote:
> Gram,
>
> [] Read Dennis Holverstott's reply.
>
> > [] Mark
>
> Tx. for your reply. I have read it, I also appreciate it greatly for its
> conciseness, even though I was already aware of this in principle.
> AM I to assume then that:
> "The STOP LIMIT ORDER (on which several writers have spent realms, Joe Ross
> springs to mind, for example) cannot be used as they describe and namely,
> for the purpose which I described in my email of this afternoon."
> Agreed everyone? Or can we use the STOP LIMIT to deal with some situations
> and, if so, which?
> Altenatively, if the STOP LIMIT has no use, let's abolish it from the
> vocabulary!
> Regards,
> Gram.
>
> >Gram,
> >
> >You said
> > The whole point of my using SWL is see
> > prices TRADE THROUGH.
> >
> >In that case, don't use a stop with limit order. Just use a regular stop
> >order and drop the price by one tick.
> >
> >Mark Morrison
> >PMB, Inc.
> >
> >> -----Original Message-----
> >> From: Gram [SMTP:gramario@xxxxxx]
> >> Sent: Thursday, June 15, 2000 10:42 AM
> >> To: realtraders@xxxxxxxxxxxxxxx
> >> Subject: [RT] R: STOP LIMIT
> >>
> >> I take your point, as I forgot the Bonds do not take SWL, but it was an
> >> example so we can consider it as COMEX or any exchange that does.
> >> My thinking was closely to what IRA wrote about two minutes ago.
> >>
> >> As to your rhetorical question when you wrote:
> >> If the Bonds open at 97-07, and you tell me to sell at 96-25 stop limit,
> I
> >> would wait for Bonds to trade at or through 96-25, and then I would place
> >> an
> >> order to sell at 96-25 limit. If you happen to get filled better, let's
> >> say
> >> 96-26, when you should have been filled at 96-25, would you complain?
> >>
> >> I do not really want to be filled at 96.26 instead of 96.25. I prefer
> >> 96.24
> >> (but no further). Being filled at 96.26 in this kind of situation only
> >> increases the chance of whipsaws. The whole point of my using SWL is see
> >> prices TRADE THROUGH.
> >> Best,
> >> Gram.
> >> -----Messaggio originale-----
> >> Da: Mark Morrison <mmorrison@xxxxxxxxxx>
> >> A: Gram <gramario@xxxxxx>
> >> Data: 15/06/2000 17:29
> >> Oggetto: RE: [RT] STOP LIMIT
> >>
> >>
> >> >Gram,
> >> >
> >> >They don't take STOP LIMIT orders in the Bond pit, so as a full service
> >> >broker, I would do the work myself. Let's start with some definitions:
> >> >
> >> >A MARKET order is an order to buy or sell immediately, regardless of the
> >> >price.
> >> >
> >> >A LIMIT order is an order to buy or sell at a certain price, OR BETTER.
> >> >(Lower is better for a buy, Higher is better for a sell.) In other
> >> words,
> >> >"limit" means "that price or better".
> >> >
> >> >A STOP order is an order to buy or sell at the market once the market
> >> trades
> >> >at or through the stop price. Since it becomes a market order, you may
> >> get
> >> >filled at the same price, a worse price, or a better price. Usually you
> >> are
> >> >filled at a worse price. That is called "slippage".
> >> >
> >> >A STOP LIMIT order is an order to buy or sell at a certain price once
> the
> >> >market trades at or through the stop price. It is similar to a regular
> >> stop
> >> >order in that it is contingent upon the market trading at or through a
> >> >certain price. But it is different than a regular stop order in that it
> >> >becomes a limit order (or better order) rather than becoming a market
> >> order.
> >> >
> >> >If the Bonds open at 97-07, and you tell me to sell at 96-25 stop limit,
> >> I
> >> >would wait for Bonds to trade at or through 96-25, and then I would
> place
> >> an
> >> >order to sell at 96-25 limit. If you happen to get filled better, let's
> >> say
> >> >96-26, when you should have been filled at 96-25, would you complain?
> >> There
> >> >is no other way to do it, that I know of. The floor broker in the Bond
> >> pit
> >> >will not accept that type of order. I would have to do this manually.
> >> >
> >> >I hope this answers your questions.
> >> >
> >> >Mark Morrison
> >> >PMB, Inc.
> >> >
> >> >
> >> >> -----Original Message-----
> >> >> From: Gram [SMTP:gramario@xxxxxx]
> >> >> Sent: Thursday, June 15, 2000 9:47 AM
> >> >> To: Mark Morrison
> >> >> Subject: R: [RT] STOP LIMIT
> >> >>
> >> >> But this is a STOP LIMIT, not a LIMIT. Neither is OR BETTER REQUIRED.
> I
> >> am
> >> >> giving an order to sell at an exact price, no other price being
> >> accepted.
> >> >> And as it is a sell, prices should be above (not below).
> >> >> Don't you agree?
> >> >> Gram.
> >> >> -----Messaggio originale-----
> >> >> Da: Mark Morrison <mmorrison@xxxxxxxxxx>
> >> >> A: gramario@xxxxxx <gramario@xxxxxx>
> >> >> Data: 15/06/2000 14:47
> >> >> Oggetto: RE: [RT] STOP LIMIT
> >> >>
>
> >> >> >Gram,
> >> >> >
> >> >> >If the market opens at or below 96-29, I would place an order to sell
> >> the
> >> >> >Bond at 96-29 limit (o/b). If it opened above 96-29, I would set a
> >> low
> >> >> >alert on my quote machine to beep when the market traded at or below
> >> >> 96-29,
> >> >> >then place the order to sell at 96-29 limit.
> >> >> >
> >> >> >Mark Morrison
> >> >> >PMB, Inc.
> >> >> >
> >> >> >
> >> >> >> -----Original Message-----
> >> >> >> From: Gram [SMTP:gramario@xxxxxx]
> >> >> >> Sent: Thursday, June 15, 2000 6:41 AM
> >> >> >> To: realtraders@xxxxxxxxxxxxxxx
> >> >> >> Subject: [RT] STOP LIMIT
> >> >> >>
> >> >> >> Hi,
> >> >> >> just wondering if you fellow RT's can clear up something.
> >> >> >> If I call my broker beofre the market opens today (15th June, 2000)
> >> and
> >> >> >> give the following order:
> >> >> >>
> >> >> >> SELL x lots US T Bonds, US0900, @ 96.29 STOP LIMIT,
> >> >> >>
> >> >> >> how should he behave after:
> >> >> >> 1/. the market opening above this price?
> >> >> >> 2/. the market opening below this price?
> >> >> >> 3/. the market opening at this price?
> >> >> >>
> >> >> >> Good trading.
> >> >> >> Gram.
> >> >> >
> >> >
> >>
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