All week long I have had problems getting my limit orders filled on the ES. Due to this, I've missed some incredible runs, and have left insane amounts of money on the table, watching the move happen with me not in it.
What do you guys do when your limit order is missed and the market starts running in your favor?
Do you guys just enter a market order? Do you chase the move?
(I'm told that chasing and market orders are bad, and are not to be used).
Getting old missing huge moves this week, and very aggravating.
I would think that different situations require different measures. If a rally or selloff is imminent then one would want to assure a oneself a seat on the bus. THe ES doesn't seem to dole out enough slippage to make it detrimental with the exception of a news release spike. I have been over your question many times in my head as I have been left behind and been filled at the top after a news release. That being said, I am just learning so I could probably learn from any imperical evidence you have noted while placing market orders.
I am under the impression that there is smart money buying at the market evident by the action at the inside bid and ask. If its good for them then it can't be all bad even for dumb money like myself.
I always use market stop loss for fear of being jumped and having price run away. I have been told that limit stop loss usally get filled, but I don't have enough proof or personal experience to rest my laurels on that premise.
"Napoleans severest comment on his beaten enemies - that they "saw to many things at once""- Hart
What you are describing is due to hindsight bias, you think you missed all these moves, but in reality you did not because your actions would have not been what you think they were.
Most users like you use limit orders because they are afraid to actually commit to the trade, so they want 'better value' with a better price.
The best advice I can give you is that you are likely not ready to trade futures. You are afraid to trade that leverage. You wouldn't have this problem of committing to a trade if it were sized correctly. Try trading smaller, and if you are down to 1 lots already then move to micros. If still not good, move to equities or forex.
Once you get the position size to 'I don't care' size then you can start working on your actual trading performance and entry/exits. It's all psychological right now and extremely dangerous when you convince yourself of certain outcomes like "missing big trades" which is frankly 100% bs.
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The following 6 users say Thank You to Big Mike for this post:
1) I agree with Mike -- you see the move happen, without you. But the question is, would you have actually held that trade, for the whole thing? Doubtful. If you aren't willing to pay up a few ticks, guarantee you aren't able to hold while it rips 20 handles.
2) Instead of a straight market order (which is bad), use a marketable limit order (e.g., if market is 2013.00x2013.25, and you want to get a fill, put your buy limit at 2013.25 or higher and it will be filled immediately). This guarantees you get your fill at that price or better, with a near 100% chance of getting it, while still guaranteeing against a liquidity pull or adverse event that can happen in the few milliseconds between your brain registering 'click' and the order being filled at the exchange. "Chasing" is bad, but nothing wrong with paying up to take a trade that is good.
3) This week is rollover, so ES liquidity shifting contracts and bound to be more thin than normal. But more so due to volatility this week ramping up.. vix is going to be 19-20 today and when that happens, market is whippy and volatile, and takes a different approach to trading it than when vix is 12.
The following 2 users say Thank You to josh for this post:
Say you anticipate a reversal after price has made a double bottom and you see another test in development then you might use an OCO order by placing a limit order 1 tick above the bottom and a stop limit at a logical place in case the limit order is not filled. Here is an example:
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I'm not sure what your setup is like or how you trade but using a DOM is useful to sometimes get trades on/off immediately without paying the spread or using a limit.
Personally I found that Limit Orders just don't work for me when trading. I end up focusing on the fill and it takes my focus away from the order flow and out of 'the zone'. I also think to myself "well if my Limit got filled as orders swept through then am I wrong?" This also doesn't help my focus.
I prefer to hit the Bid/Ask with a market order or using a 'marketable limit order' (as mentioned previously) using the DOM to hit it. I find that paying this small cost is worhtwhile to maintain focus. I have enough belief in my method to allow for this extra cost without it hindering my trading.
One thing I will say - the market you trade greatly affects the importance of this. Trade CL and in my opinion limits are almost pointless - just hit the market. If you are trading Treasuries then you are almost forced to use Limits to be profitable but you will have a lot more probablilty of getting a fill.
Just my 2c
The following user says Thank You to CobblersAwls for this post:
Actually I've been trading the ES for the last two years, profitably.
What Big Mike has said is partially correct. I have a trading coach and he's scratching his head that I have "missed some huge moves" and to "just get in the damn trade". So yeah, I have that in my head, unfortunately.
But at the same time he's always hammering home about "chasing" and not to do it. And he also is always ragging on not using market orders since they "never get filled right".
True, if the trade is solid, I might need to just STHU and get in, and be willing to pay up to do it. Maybe loosen up a bit.
Thanks for the quick replies, guys.
The following user says Thank You to Krav69 for this post:
Although they may seem contradictory there is a key difference in my opinion.
If you have a well thought out trading plan and a level or trade idea that you have pre-planned comes into play then by hitting the Bid/Ask and sacrificing a tick for a guaranteed entry is 'ok' in my opinion. If everything you know is telling you to place the trade then "just get in the damn trade". Yes you may lose but if filled you most likely would have lost anyway.
However if you do not get filled at your level or perhaps you were watching a level but felt uneasy or you had a reason for not wanting to enter - but you see price starting to pull away in your desired direction, you may get a strong urge to try and jump into the trade in order to chase that missed opportunity, hoping for enough momentum to carry you to your PT. This is fear and greed taking over and what I would class as "chasing".
I suppose it depends on your setup, connection performance, latency and ping to the servers/exchange. On the ES I usually always get filled to the tick during RTH, however, today I did get slipped a tick but it was volatile at the time and the order book is pretty illiquid at the moment (approaching xmas and it's contract rollover time).
What do others think about this issue?
This is just my opinion, there are other veteran traders here who may give alternative, better advice.
The following user says Thank You to CobblersAwls for this post:
If using a quick order entry method like a DOM or level 2, there is no reason ever to use "buy market" -- quickly click a bid a few ticks higher and the bid will be marketable and you'll get filled near the market. You'll get the same fill you would have if you had clicked the buy market button, but with a guarantee you won't get screwed on a fill. If it goes so fast that your limit bid above the market doesn't get filled, chances are you don't want to get filled using a market order to begin with.
The following 4 users say Thank You to josh for this post: