Track 'n Trade Futures End of Day
LMT & MIT Orders
Now, let's go to the next type of order style. Let's talk about a Limit Order. What's a Limit Order? Now, what would we want to do with a Limit Order? Let's go through and read the rule about a Limit Order. Limit Order: Limit Orders to Sell, are placed above the current price. The market may touch the Limit Price several times, without filling. In comes cases the market must trade better than the Limit, for the order to fill. Track 'n Trade fills Limit Orders when the market trades better than the Limit Price.
Okay, so what you're saying when you place a Limit Order is, that you want to get that price, or better.
But first let's talk about what we can place Limit Orders. Limit Orders to Buy have to be below the market. To Sell they have to be above the market. Now, that seems kind of odd. Why would I want to do that?
Let's come back here and clean up some of this stuff. I'll come over here, and delete it. Okay... at this point, I think that this market is going to go up. But before it goes up, I think it's going to come back down, further. It's going to come back down and touch this line. So, my thought is, I want to get in right down here. Before this market takes off. I think it's going to come down a little bit, then I think it's going to take off and run, like this.
So, this is an opportunity for you to use a Limit Order, on a Buy position, alright? So, there's two ways we can use Limit Orders. Now, I'm going to show you both ways. The first one is, I think that the market is going to take off and go long, but before it does, it's going to have a pullback. Often times, you know, markets move in waves, right? Markets take one step forward, two steps forward, one step back, two steps forward, one step back, two steps forward, one step back. If that's the case, we would want to, (and we're in this position right here) let's say, we're waiting for this market. It's gone, two steps forward, one step back, two steps forward, and we think that it's going to make that one step back, again, to this level. Maybe we can use one of our tools, to help make that decision. Maybe we'll use our Fibonacci Ruler, or 50% Ruler. We say, okay, markets take two steps forward, and one step back We're going to expect this market to drop back to about this level. So, we're going to expect it to back to this level. Then, it's going to take off and go forward, right.
So a Limit Order allows us to place an order kind of like a Stop Order at the 50% level before the market to Buy the market, when it hits that price. So, if we think that market it's going to come down, and hit a specific price, and then bounce back up. This is where we can use our Limit Order.
We're going to come in here, and we're going to Buy a Limit, and we're going to say, okay, if it comes down and touches this price, we're going to buy 1, on a Limit Order. So, that market is going to come down, touch my order, then turn around and take back off. Alright?
So, that's the idea. We can come in here and we can place a Limit Order, right here, to Buy when the market is currently at this price, right here. We're doing that in anticipation that the market is going to do a pullback, fill our order, and then take off. Okay, so, we're behind the market. It's kind of a, kind of a hard thing to do, because what if the market just took off right now, and left you in the dust? Well, that's the nature of the game.
So, we step forward, so we're filled. Now, we're long the market. The market is going down, but we're actually long the market. Because we feel like this is the bottom of the market.
Then, as the market turns around and goes the other way, we're now making money on the long side of the market. Kind of an advanced concept, but that's the way that the Limit Orders work on a Buy Limit below the market.
Now, let's talk about a Limit Order, a Sell Limit Order, above the market. Now, let's say that we have a target price. Now, let's come in here and say Okay, our market has just come in and done this. This is what our market did. It came down, it came back, it hit our area that we anticipated. So, let's get our other tool in here, draw our picture, it came in like this. Now, we're going to use our Fibonacci Ruler, or let's use our 123 Projection Tool. We're going to say this market went from here, to here, back to here. Now we have a projection. Let's get our prediction.
We think the market is going to predict our prediction light, is that it's going to come out to this point, here. Okay? So, we have a target area, where we think this market is going to go to. So, we can Limit out our position. So, lets come in here, and we can place our Limit Order, right out here. Then the market would come up and when it touched that price, we would get out of the market, and we would take the profit between where we got in, (which would be down here, on our Limit Order) and where we got out, up here on our Limit Order. Okay?
So, now, we're in the market, down here at the bottom. But let's say, for example purposes- we think that the market is going to come to this price level right here, okay? If that's the case, we want to get out of the market, when the price hits this price level.
So, let's place another order. We're going to place a Limit Order, a Limit Order. We're going to (because we're above the market, and we're already in it) we're going to Sell 1 Market, at a Limit, Okay? Because we're in the market long, we're going to go short, we're not going to go short, actually, we're going to get out of the market at 181.42, which is our target price. We're going to hit Okay. Now, once the market comes up and touches that price, the broker will have to fill our order at that price or better. Now, that's the key, at that price, or better. Because it's a Limit Order, okay?
Now, what if the market comes up and touches 181.42 and then immediately drops back down? You might not get filled. You'll call Lan Turner on the phone and say, 'Lan, your Software doesn't work! My price hit 181.42, the market hit 181.42, but your software didn't fill it!'
Well, it was a Limit Order, that's right! In the real market, what happens, is the market price will go up, and on the floor, if that broker does not have time on the floor to fill your order, at 181.42, or better- he won't fill your order. He won't fill your order.
You won't get your price. Okay, you won't get out. So, you have to realize that when you use a Limit Order, you're telling the broker on the floor, I want 181.42, or better. If you can't get me 181.42, don't get me anything! Alright?
So, now as this market moves up, in time, and it goes through our price, 181.42, Track 'n Trade is going to simulate that. It's going to give you 181.42, because the market went through your price.
Now, let's back up. We're out of the market, and we took our profits.
Now, let's change this order. This is no longer a Limit Order, let's go into our Settings. Let's change it from a Limit Order to a Market If Touched Order. What 's the difference? What's the difference between a Limit Order, and a Market If Touched Order? Let's come down here and read the rules: Similar to a Limit Order, orders to Buy are placed below the current price. Orders to Sell are placed above the current price. Okay? Market If Touched Orders fill once the Limit Price is touched or pass through. Track 'n Trade will fill Limit Orders in the Limit Price on the day you filled your order. On the day your order fills, if the price in the trading, is in the trading range. Or at the opening price of the day.
So, what we're saying here, is that if you have that be a Market If Touched Order, and that price comes up and touches that price, now it's got the same rules, it has the same rules as the Limit Order. To sell a Market If Touched, has to be above the market. To Buy a Market If Touched, has to be below the market. So, it's the same rules in that regard, as the Limit Orders. The difference is, on how it's filled. The difference is on how it's filled.
So, if the broker on a Limit Order, can only get you 181.42, or better, with a Market If Touched Order, it turns into just like a Market Order. Once the price of the underlying market goes up and touches that price of 181.42, it's going to- he's going to get you into the market short, or he's going to liquidate your position, at the best price he currently can. It may not be 181.42, it may not be above 181.42, it may be a little below 181.42, but if the underlying market touches a Market If Touched Price, he's going to execute that order, no matter what. He's going to execute it and get you either in or out of the market. He's going to fill that order, okay?
So, the guarantee on a Limit Order, is that it'll be at the price or better. The guarantee on a Market If Touched Order, is that if the market touches it, it will get filled. So, those are the differences. Those are some tools that you can use in your trading scenario.
So, as this market again, moves forward, you can see that we now got filled, and we're out of the market. We took the, we took the profits, from the distance from where we got into the market, which is down here, to where we got out of the market, which up here. Now, you say, well, what's the difference, Lan? What's the point?The point is, that what if we were doing a Trailing Stop position. Okay? What if we were doing a Trailing Stop position? You have both an advantage, and a disadvantage, in this type of trading.
First of all, the disadvantage of having a Limit Order underneath a Buy Limit Order, is that the market may not ever come down and touch your position, and get you into the market. It may come down close to it, and then jump and take off, and run without you being in the market. So, you didn't get filled, and you didn't get in the market on a- you missed an opportunity because you were trying to catch the very.... best price at the bottom of the market. So, that's the disadvantage.
The advantage of being under the market, like this, of course, is that you're going to capture more profit. If the market hits your price, then turns around and takes off.
Now, what's the disadvantages? The disadvantages of a Sell Limit, or a Sell Market Order up here, is the disadvantages are you might Stop yourself out, right? Then, your profits have stopped. What if the market continues to go higher? Well, you're out of the market. You took your profits at this level, here. So, you took your profits at this level, here, and you're now out of the market. But the market continued to run higher. So, you limited yourself out. Okay? That's the disadvantages of putting a target out there.
The advantages of putting a target out there, is what if the market comes up and touches your market price, you get in; or the market comes back down and turns around and touches the Stop Loss Order, that's way down behind a Trailing Stop? You may be doing a Trailing Stop position and suddenly the market turns around and comes back down, and you lose the amount of money, (the distance between where you might have gotten out) or the peak of the market, and where it might have turned around and came back down, turned around and came back down, and touched your Stop Loss position. So, you lose the distance between your Trailing Stop and the top of the market. That's the disadvantage, okay?
So, you have advantages and disadvantages with all the market types of orders.