Been trading for a while now and still switch between these two depending on market conditions.
Limit orders give me better fills when there’s time but stop quotes seem faster during volatile sessions.
What’s your usual go-to and why?
I prefer market orders for most trades. They ensure I get in rather than miss opportunities by waiting for a limit fill.
During busy sessions, waiting on a limit can lead to missed setups. I only use limit orders when planning ahead and I’m okay with them not hitting.
I use limits for almost everything now. Took me years to get over being impatient with fills.
Those extra pips from bad fills really add up. I tracked it for 6 months and couldn’t believe how much slippage was killing my profits.
I set limits 2-3 pips from current price. If it doesn’t fill in 30 seconds, I cancel and look again. Either I missed the move or my timing sucked.
Only time I don’t is when I’m cutting losers. Then I use market orders to get out fast. Rather eat the slippage than watch a small loss go bad.
The Problem: You’re unsure whether to use limit orders or stop orders for your trades, depending on market conditions. You’ve found that limit orders provide better fills during less volatile periods, while stop orders seem faster during volatile sessions. You’re looking for guidance on choosing the best order type for different situations.
Understanding the “Why” (The Root Cause):
The choice between limit and stop orders hinges on your trading priorities: price versus speed.
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Limit Orders: These orders specify a price you’re willing to buy or sell at. They prioritize getting the best possible price but might not execute if the price doesn’t reach your specified level within a timeframe. This is ideal for less volatile markets where you have time to wait for a favorable price. The potential benefit is better fills (avoiding slippage), leading to higher overall profitability in the long run.
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Stop Orders: These orders specify a price at which your order is triggered (buy or sell). They prioritize speed of execution, ensuring your order is filled even if the price moves quickly. This is advantageous during volatile sessions or breakouts where quick entry/exit is crucial to capture the move. The potential drawback is slippage; you may not get the exact price you wanted, impacting your profitability.
Choosing between these depends entirely on your trading style and market context. Consider the trade-off between getting the price you want and getting in (or out) of the trade quickly.
Step-by-Step Guide:
Step 1: Assess Market Conditions: Before placing any order, gauge the market’s volatility. Is it a quiet, range-bound market, or is it experiencing significant price swings? News events, economic announcements, and high volume often indicate higher volatility.
Step 2: Define Your Trading Strategy: What’s your goal with this trade? Are you looking for a specific price, or do you need to enter/exit the trade quickly to capitalize on a momentum move?
Step 3: Choose Your Order Type:
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For less volatile markets and when price is paramount: Use a limit order. Set your price carefully, considering the bid-ask spread and potential slippage. Be patient; the order may not fill immediately.
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For volatile markets and when speed of execution is critical: Use a stop order. Be aware that you might experience slippage, meaning the actual execution price may differ from your stop price.
Step 4: Monitor and Manage: Regardless of the order type, actively monitor your trades. If a limit order doesn’t fill within a reasonable timeframe, consider adjusting your price or canceling it. If a stop order fills at an unfavorable price, review your stop placement strategy.
Common Pitfalls & What to Check Next:
- Incorrect order type: Double-check that you’ve selected the correct order type (limit or stop) based on your trading strategy and market conditions.
- Slippage: Understand that slippage can occur with both order types, particularly during volatile periods. Factor this into your risk management plan.
- Order size: Ensure your order size is appropriate for your account balance and risk tolerance.
Still running into issues? Share your (sanitized) config files, the exact command you ran, and any other relevant details. The community is here to help!
Stop orders for entries limit orders for exits
Stop orders for entries, limit orders for exits - been using this setup for years.
Stop orders get me into breakouts fast when momentum hits. Missing a solid breakout because my limit order won’t fill costs way more than paying an extra pip or two.
For exits, I stick with limits. Markets usually overshoot my targets for a second before pulling back, and the limit grabs those quick spikes.
Only time I break this rule is scalping during major news events. Then it’s all market orders - anything else just sits there while price takes off without me.
Depends on your strategy and urgency. Limit orders are effective if you have a target price and can wait. The pips you save matter over time.
On the other hand, use stop orders when you need quick entry. For breakouts or news events, it’s better to get in than to miss out on price movements.
It’s about your trading style. If you can react to market changes, stops may work best. If you plan trades ahead, limit orders generally yield better outcomes.