Hi xplorer, if I am in a winning position and I close at market then Im taking a hit of 1 tick.
However, if I close with a pending order, then I gain that extra tick because Im waiting for buyers to come to me?
So in a winning position it is better to gain that tick by being patient?
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Looking at the picture let's say you want to buy immediately, so you put in a buy market order. What you are buying is the best price offered (i.e. being sold to you) which at that moment in time is 1933.75.
(opposite scenario: if you want to sell at market you would sell at 1933.50, that's the best price for you to sell)
Let's say you are lucky and price starts moving in your direction.
First it will move one tick in your direction. Usually this means that the little rectangle enclosing the buy/sell prices (i.e. the Best Bid/Offer) will move 1 tick up. Now you have the rectangle enclosing 1934.00 and 1933.75.
If you decide to get out now, you would have to sell at market. You bought at 1933.75, you are selling at 1933.75. Nothing gained.
If you wanted to make 1 tick profit, you would have to wait until price (i.e. the Best Bid/Offer) moves 1 more tick enclosing 1934.25 and 1934.00.
Alternatively you could put a limit order at 1934.00 as soon as you buy and wait to see if you get filled (which means wait to see if the Best Bid/Offer moves to 1934.25 and 1934.00.
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Since you will by buying a contract to close the position, you will need to look at the offers available. In this case if the price trades at 52.81, you may find that there is an offer at 52.81 and you could potentially get filled at price. It could also be that the closest offer is at 52.85 and if you buy at market (assuming a regular stoploss) that may be where you get filled. It could also be that you get filled better or worse - it all depends on the market, the liquidity and the lag of your internet connection.
If you are trading via a forex broker, you would most likely get filled at the current market price + 50% of their bid/ask spread.
Refer to the above, except in this case it depends on where the closest bid is. Forex brokers will fill you at market price - 50% of the bid/ask spread.
Easiest way to wrap you head around this, would be do to as @xplorer suggested and just download some futures platform and play around on their demo accounts.
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