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MIT vs Limit Orders


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MIT vs Limit Orders

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  #1 (permalink)
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Limit orders. I hate them.

I can't tell you how many times I've seen the price reach my limit order and sit there, only to leave unfilled and miss out on a profitable trade. Even worse, when I see my profit target hit repeatedly, only to turn around and stop me out. Many of my big losses would have been small gains if I got filled at my profit target. Many of my missed trades would have been wins, big or small, if I my limit orders got filled. It was so bad that I decided to only enter and exit with market orders. I chose bad fills over no fills.

Market If Touched orders were not available to me on most of the platforms I have traded. I recently switched to NT and to my delight the MIT option is available.

However, I have no real experience trading with MIT orders and therefore, for the first time ever, I thought I would ask experts first before I jump in and see what happens.

That's why I joined Big Mike's!

So here is the question:


Is there a distinct advantage or disadvantage about trading with MIT vs Limit Orders? Or is it one of those "six of one, half a dozen of the other" deals where its more about the kind of pain you prefer, missing ticks or missing out altogether?

Thanks for reading!

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  #3 (permalink)
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I share your frustration with limit orders. But I know some traders swear by them. I have used both market and MIT orders and I have noticed very little difference between them.

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  #4 (permalink)
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capitalistdog View Post
Limit orders. I hate them.

I can't tell you how many times I've seen the price reach my limit order and sit there, only to leave unfilled and miss out on a profitable trade. Even worse, when I see my profit target hit repeatedly, only to turn around and stop me out.
That's why I joined Big Mike's!

Thanks for reading!

Was this on TOS that your limit orders were not filled regularly or on another platform?

Latency could be a factor

@capitalistdog

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  #5 (permalink)
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Traderjohnsblog View Post
I share your frustration with limit orders. But I know some traders swear by them. I have used both market and MIT orders and I have noticed very little difference between them.

Sent using the futures.io mobile app

Do you personally prefer market to limit orders? I know that many traders have very strong opinions on whether to enter with market or limit orders. I have always assumed that it depends on their own personal experiences and the type of pain they prefer.

I find it interesting that you have noticed little difference between market and MIT orders. I would have thought that the execution of the MIT orders would be much faster, and may also help reduce errors caused by over or under reacting to changes in market pace near the order target. However, that may be more of a lack of skill on my part rather than a real deficiency with market orders.

Thanks for the response, Traderjohn. Greatly appreciated!

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  #6 (permalink)
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WOW CO View Post
Was this on TOS that your limit orders were not filled regularly or on another platform?

Latency could be a factor

@capitalistdog

"

TOS for sure, but also Trade Navigator. I have not traded other platforms other than those. I had the same problems with both and I was told by my brokers that was the nature of limit orders and that is understandable. I am in the process of leaving TOS because I have noticed latency with feeds and execution of market orders, latency that I did not experience executing market orders on TN.

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  #7 (permalink)
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Limit and Market orders can be considered our employees or tools. Knowing when to use a certain tool for the job is the key, or for that matter assigning a task to the correct employee to obtain the desired result.

Assessing the current condition of the market just before you execute is paramount in the decision of which tool to use. This takes some level of skill and other tools to acquire this information.

Helpful in this regard I feel are "foot print" type charts, time and sales, DOM... Jigsaw tools work very well for this.

One needs to discern if the limit orders are getting hit to the point that they completely run out and the price moves to the next level/price, or if the limits are being added to and replenished or pulled a lot or if the book is so super deep at this moment in time and the trade at just an average pace that fills are unlikely....

Then very closely related to this of course, because limits only pair with markets, we need to analyze how the market orders are being used as the inherently aggressive action.

Then from these observations we can have a better chance of getting filled... You have now put the odds more in your favor for your fills by this analysis but it's still < 100%.

Ron

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  #8 (permalink)
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capitalistdog View Post
"

TOS for sure, but also Trade Navigator. I have not traded other platforms other than those. I had the same problems with both and I was told by my brokers that was the nature of limit orders and that is understandable. I am in the process of leaving TOS because I have noticed latency with feeds and execution of market orders, latency that I did not experience executing market orders on TN.

@capitalistdog

Latency on TOS has been mentioned on Futures IO before ....




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  #9 (permalink)
 
 
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So now with limit orders you see many times where the limit order causes you to miss a trade, or to miss exiting at the right trick.

The funny thing is that if you go to a different type of order, you'll be frustrated at different things. You'll now see the times where your target just gets hits, and you exit, but the price kept going, and you'll think about the tick in profit you "lost." Or you'll see your entry get filled, and instead of taking off without it, market collapses with you in it.

The lesson is that in the end the exact type of order won't be a make or break proposition. What you focus and dwell on will be.

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  #10 (permalink)
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capitalistdog View Post
Do you personally prefer market to limit orders? I know that many traders have very strong opinions on whether to enter with market or limit orders. I have always assumed that it depends on their own personal experiences and the type of pain they prefer.

I find it interesting that you have noticed little difference between market and MIT orders. I would have thought that the execution of the MIT orders would be much faster, and may also help reduce errors caused by over or under reacting to changes in market pace near the order target. However, that may be more of a lack of skill on my part rather than a real deficiency with market orders.

Thanks for the response, Traderjohn. Greatly appreciated!

Personally I prefer market orders. But do take into consideration that I am not a scalper so a not so great fill does not mean much to me if the overall trade goes my way.

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  #11 (permalink)
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You're giving up a tick if you execute MIT. At least a tick. You're also open to greater price risk in thinner markets.

If your limit orders are not getting filled there's something else going on. Monitor your position in queue using the EPIQ column in MD Trader or Market Grid. You'll know your worst case position in queue that way. CME is rolling out MBO as well. MBO will provide actual position in queue at the matching engine. This rollout will be gradual...and there's been some problems already...but this will be a great piece of information for traders to monitor and use in their trading.

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  #12 (permalink)
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kevinkdog View Post
So now with limit orders you see many times where the limit order causes you to miss a trade, or to miss exiting at the right trick.

The funny thing is that if you go to a different type of order, you'll be frustrated at different things. You'll now see the times where your target just gets hits, and you exit, but the price kept going, and you'll think about the tick in profit you "lost." Or you'll see your entry get filled, and instead of taking off without it, market collapses with you in it.

The lesson is that in the end the exact type of order won't be a make or break proposition. What you focus and dwell on will be.

So what it boils down to is choose your pain, as I suspected. Well, I tend to prefer market orders. I rarely fret about a missed extra tick when I hit my profit target. I scream bloody murder when I get stopped out after hitting my profit target for the third time in a row on the same day.

Your point is well taken - there will often be times when using one or the other would have yielded a better result. Too, I am learning about the DOM and I may be able to have more success with limit orders if I learn how to spot market condition where getting a fill with a limit order looks more likely.

Thanks for the insights, kevindog!

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  #13 (permalink)
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Just out of curiosity, what are you trading? Futures, forex or ?

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  #14 (permalink)
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Blash View Post
Limit and Market orders can be considered our employees or tools. Knowing when to use a certain tool for the job is the key, or for that matter assigning a task to the correct employee to obtain the desired result.

Assessing the current condition of the market just before you execute is paramount in the decision of which tool to use. This takes some level of skill and other tools to acquire this information.

Helpful in this regard I feel are "foot print" type charts, time and sales, DOM... Jigsaw tools work very well for this.

One needs to discern if the limit orders are getting hit to the point that they completely run out and the price moves to the next level/price, or if the limits are being added to and replenished or pulled a lot or if the book is so super deep at this moment in time and the trade at just an average pace that fills are unlikely....

Then very closely related to this of course, because limits only pair with markets, we need to analyze how the market orders are being used as the inherently aggressive action.

Then from these observations we can have a better chance of getting filled... You have now put the odds more in your favor for your fills by this analysis but it's still < 100%.

Ron

Thanks Ron, that is a great way to look at it! I have been studying the lessons on the order flow at Jigsaw (which are amazing!) and I started to see when it would be more advantages to use a limit or a market order based on the order flow. It's going to take a lot of practice, but with hard work I think I can learn when to use each type based on what the order flow is telling me. Great answer! Thank you!

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  #15 (permalink)
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TradingTech View Post
You're giving up a tick if you execute MIT. At least a tick. You're also open to greater price risk in thinner markets.

If your limit orders are not getting filled there's something else going on. Monitor your position in queue using the EPIQ column in MD Trader or Market Grid. You'll know your worst case position in queue that way. CME is rolling out MBO as well. MBO will provide actual position in queue at the matching engine. This rollout will be gradual...and there's been some problems already...but this will be a great piece of information for traders to monitor and use in their trading.

That sounds very helpful - I didn't know there was a way to monitor my position in the queue! I absolutely have to look into that. Thanks TT,

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  #16 (permalink)
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Traderjohnsblog View Post
Just out of curiosity, what are you trading? Futures, forex or ?

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Futures. I actually looked into Forex, but it looks like FX comes with its own set of headaches.

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  #17 (permalink)
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WOW CO View Post
@capitalistdog

Latency on TOS has been mentioned on Futures IO before ....




Yes, I have experienced these latency issues myself. It was one of the reasons I decided to try to lean NT and I am getting ready to transfer at least my futures account soon.

Not an easy thing for me to do. I am a slow leaner and I hate learning new platforms so once I did get comfortable with TOS it wasn't easy to decide I need something else. But the latency issues were really an impediment.

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  #18 (permalink)
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Do you have access to the DoM on your platform to see what the bid/ask tree looks like?

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Flintsone99 View Post
Do you have access to the DoM on your platform to see what the bid/ask tree looks like?

Yes, I have the Jigsaw Depth and Sales from Jigsaw. It really has changed the way I look at the markets.

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Here's a view of MD Trader with the EQIQ column exposed.


This was taken in our demo environment. You are welcome to access out demo environment by following this link: http://www.tradingtechnologies.com/try-tt-now/

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TradingTech View Post
Here's a view of MD Trader with the EQIQ column exposed.


This was taken in our demo environment. You are welcome to access out demo environment by following this link: http://www.tradingtechnologies.com/try-tt-now/

Thanks TT - I will check it out.

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