Track 'n Trade Futures End of Day
MKT, MOO, MOC Orders
In this Track 'n Trade Pro Trading Training video, I want to talk to you about orders. Now, I have a little bit of a different theory on market entry, than other people. So, know and realize that when you listen to me talk, you listen to the theory as Lan Turner sees it. Also, that when you listen to someone else talk, they may give you a different theory.
Now, I will go through and tell you what some of these other people say, then I'll tell you why I believe why you should do it, or why I do it my way. I'm not going to tell you how you should do it. All I'm going to do is tell you how I do it. Then, you can decide for yourself how you should do it.
Now, let's first of all, talk a little bit about orders. In Track 'n Trade, being a trade simulator, the software has the ability of simulating most of the market orders that you can, most orders that you can get on any exchange. It also has the ability of simulating orders that you can't get on some exchanges and requires a full service broker to accommodate you with. But that's okay, that's what a full service broker is for. It depends on the different trading platforms, if you're trading electronically, or what you have available to you. It also depends on whether you're using a full service broker, or a trading platform, on what you can and can't do, with your order style.
Now, most of the stuff that I talk about, I'm talking about using a full service broker; because if a full service broker doesn't have the ability of doing the order automated, they will do it manually, for you. That's the nature of having a full service broker, and the advantages thereof.
So, we're going to go through some of these scenarios. The first thing I want to do is, I want to talk about different types of orders. How you can find out in Track 'n Trade what those different types of orders are, and how they're used. So, let's go through and the first thing we want to do is we've got to.. to get to the order Help Menu, all we do is we come up here, we click on the Buy/Sell tool. We can place an order on the screen, and when we get the order placement dialogue, that you see popped up here in the screen. You'll notice that when we go to place an order, we have this order dialogue box. Now, it's going to come up, and the very first thing you'll see, is where it comes and says brokerage fee, this date; or this trade. Now, this is for each trade, this is not a round turn.
You know, you go to your broker, any broker that you might have. You say, 'Well, what is my brokerage fee?' They generally will quote those to you, in what they call a Round Turn. The word, Round Turn, means that they are going to quote you how much it costs to get into the market and back out of the market. Alright? So, Track 'n Trade only does this on one side, though. Each time you get into the market, we're going to charge you $14.00. Each time you get out of the market, we're going to charge you another $14.00. So, the Round Turn on this example, we're seeing, here, would be a $28.00 Round Turn, alright? So, 14.00 in, and 14.00 back out.
Now, I'm going to tell you why they do it this way. A brokerage firm will charge you a Round Turn. They generally charge you the full amount up front on the first entry. Now, Track 'n Trade we do it, where we charge you half of it in, and half of it out. Which is generally a little bit different than what the brokerage firm does. The brokerage firm generally charges you the full amount, full round turn on the entry. So, they'll charge you the full $28.00 when you get in, and nothing when you get out.
The reason they do this, is because often times you might be placing an Options Orders. When you place an Options Orders....you're order will go to expiration, and there's nothing that you do. You don't get back out, when your Option expires worthless. So, there's no time for them to execute the exiting of the order. That's why they charge the both sides up front. It also let's you know, it kind of gives you a target, as to where you have to be to break even, as well. But the reason they do that, is so they get their money up front. Then, if you have an Option Order, that expires worthless, there's nothing that they do to collect the money. There's no execution, but they got their commission. They collect that on the front end. So, that's how brokerage firms do that.
So, Track 'n Trade does it a little bit differently. The reason we broke it apart like this, is because there are brokerage firms, (they're rare) but they do break them apart. They do half on one side, and half on the other. So, this accommodates both.....both in that regard. So, you can do it both ways.
So, we come in here and we say our brokerage fee on this trade is $14.00 in. Then, we come in and we have Placement Detail. Now, I place this one here, 6/19/2006. You see it's greyed-out, you can't change it. That's because over here on the chart, where chart traded, chart trading tool. So, everything is seen visually on the chart. You're placing your little icon on the chart, telling us where you want to place the order, so it knows the Date is already set by the icon and the Price. This price right here is 184.00, that's the price that you set the little triangle for.
So, we're going to Buy 1 and the symbol, of course, here's your symbol. BP 2006-M is our British Pound, (Open Outcry) 2006 June Contract. Now, this is what I want to concentrate on- Order Type, Stop. Now, we've got these different types of orders. We've got Market Orders, we've got Stop Orders, Limit Orders, Market If Touched Orders, MOC Orders, which is Market On Close. We've got MOO Orders, which is Market On Open. So, they are really just about what they sound like. If you think about it, Market Order means that I want to get into the Price, or into the market immediately; at whatever the current price is.
Now, Track 'n Trade is an End of Day Application, so all orders are placed after the market has closed for the day. So, these orders will take place on the following morning, alright? Or the following day. So, you're going to have several of them that will do the same thing for you. The first one is the Market Order. A Market Order means, get me in as soon as possible, at the best price possible, at the first fill that you can. So, if that happens, you place your order after the market is closed today. It's going to get you in the first thing in the morning, which is going to be what? It's going to be the open of the market, right? So, Market On Open, is going to be the same thing as the Market Order. It's going to react exactly the same way, in Track 'n Trade and probably in the real markets. So, Track 'n Trade does its very best possible, to mimic the rules that are set by the exchanges.
So, in this case, if you place an order during the day, and you say I want a Market Order, it's going to go to the market, during the day and it's going to place your order immediately. You're going to get the price, at the current price, the best price that they can, or the first price that they can get your order filled at.
Market On Open would be if you placed it during the day, they're going to wait until the following day, right? Then, they're going to place it and you're going to get filled on the following morning's open.
Now, we have Market On Close. Market On Close is exactly what it says, it says- fill me on the Close. Now, when you're in the exchanges and you're down on the floor and you're yelling and screaming, back and forth prices; they have an opening range. They'll also have a closing range. Then, they have the days trading. So, let's talk about that, for a second. Also, how a market Tic is designed. During the day, or when you have a Tic, let's talk about a market day. Let's move this out of the way, so we can have a drawing sheet. Okay, we have an Open High/Low Close bar. This is the Open, this is the Close, alright? That's what it looks like. This point, here, of course, is the high of the day. So, as the market actually moves through time, and we can, it starts out in the morning, it moves through time, right? The market goes up and down, up and down, and up and down. Then it closes, so, at that point, we draw this, using a Tic. This is the high of the day, this is the high of the day, this is the low of the day, right here. This is the Open of the day, or the price that it opened. This is the Close of the day. So, we have the Open, High, Low, and the Close. Now, this might seem rather simple to you. It's the basics of what we're looking at, on a chart. But what you may not know, is that the opening and closing are actually a range. If we had accuracy, if we could look at this a little bit more accurately, it would probably look something more like this. If I could draw my little line straight, but you get the point. They would actually look something like this. Because in the morning when the market opens, they have about a 5 minute time frame, which they call the Open. Because think about it, what's going on down on the floor? There's several hundred guys standing down in a Pit, right? As soon as the market opens, the bell rings, DING, DING, DING, what happens? You think one guy stands up and says, 'Excuse me, I think I would like to buy the British Pound for $2.10. Uh..would anybody like to trade with me?' NO! We do not have one guy saying, 'I would like to buy at 2.10.' Then, one guy saying, 'I would like to Sell at 2.10.' Oh, that's a happy medium. Let's call that the Open of the day. NO! We have 200 guys, suddenly the bell rings and they're all yelling at other: 'BUY, BUY, SELL, SELL!' You think they're all at the same price? NO! They're not, they're not all at the same price. So, you have what we call the opening range, okay? For the first 5 minutes of trading, you have all of these guys 200 guys, 300, 400 guys, plus the whole world, all in there, yelling and screaming: 'BUY, BUY, SELL, SELL,' at different prices. Different transactions are taking place, between different buyers and sellers, throughout that 5 minute time period, okay?
So, we have an Opening Range. So, the exchange will go through and they will say, okay, the price started here, and it ended here, in the first five minutes of trading. Therefore, we take oh, some kind of a rough average or you know, whatever mathematical secret formula, that they use to derive that. They say, this is the Open for the day. It actually was an Opening Range. Then, the exchange decided somehow they decided what they wanted to be the opening numbers, alright?
Then, on the Close they do the same thing. When the market comes down to about 5 minutes, ready to close. Now, if any of you have been to Chicago, and you've stood over the, the visitors window, and you've watched... 5 minutes before the markets close, they go into the Closing Range. That's when the market goes crazy! It goes nuts during the market, during the close of the market. Because everyone is trying to, (who's a day-trader, of course) is trying to exit their positions, before the market closes. That's what these market On Close Orders, are for. To get out of the market, so they don't have to carry their positions overnight. So, the market goes crazy. Do you think that they've got one guy standing down there saying, 'I'm the very last person to make a trade, today. I'm going to make that trade at 2.03. Therefore, the close will be 2.03. No! They have 200 guys, all yelling and screaming at each other, writing little notes on pieces of paper, making bids and offers, taking bids and offers, at the very close. They're all different. So, it ends up becoming what they call the Closing Range. Then, the exchange somehow, goes in and decides; well, you know what, it looks like on Average, or whatever they use. Their little secret formula, they derive the closing range, the closing price, and they just say that's what the close is for today.
So, when you do a Market On Open, you may be filled sometime within that first five minute range. At some price. You may not get the exact price that comes through from Track 'n Trade. We get that once in awhile. 'I placed, Lan, I placed a Market On Open, and I was filled at 2.06, but yet, your software says that the Open was 2.10. Now, why was I filled at 2.06, when your software said 2.10? Your software is wrong!' NO! Our software is not wrong. What happens is, you have that range, and you got filled somewhere within that range, on the Open within the first five minutes of trading.
Then, the exchange said, on average- this is where most of the trades took place. So, uh..arbitrarily we'll call this the Open. So, just because you put a market on Open, and you got filled in the market, differently than what the software, Open says that you should have been filled; doesn't mean you didn't get filled at the Open. It doesn't mean that the software is wrong. It means that there were a lot of orders that were filled at a certain range, and we just took an average of them, and said that's the Open, or the close, alright?
So, let's go back to our example, here....where we got the chart, and let's pull up our Order Dialogue Box; and look through it, again. So, we got back down here. Now, we understand what Market Order is, right? Market Order means, of course, immediately fill it, at the best price possible throughout the day. As long as the market is going, if the market is already closed and you place a market order, either electronically or with your broker. It's going to be treated the same as a market on open. Which would be the following morning. So, we've got those three out of the way. Market Open, Market on Close, and Market.