Buy Stop and Sell Stop basic question - Page 2
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Thread: Buy Stop and Sell Stop basic question

  1. #11
    Think of it this way...
    The market is currently in 1.9500. The market bid is exactly what the other side of this trade is prepared to pay you for what you're selling. Your merchandise are sold by you to the bidder. Conversely you buy the same products from the asker. They the market is asking this price for their merchandise or services and you will pay them the ask to buy. The gap between the bid/ask is that the spread.

    Today, the disperse zone is the area in which the buyers and sellers are in odds haggeling within the price of this commodity. When you decide to pull the trigger and the market, you've got options...
    1. Go market and accept ANY price which you're filled at. This usually means going long at 1.9500 MARKET, your fill could be me(the other side) ASKING 1.9500, a fantastic bargain for you, ASKING 1.9600 and you also filled (bad deal) loosing $100.00 immediately, ASKING 1.9700 and filling your order (even worse), etc.. .
    2. The market is 1.9500 and you are not willing to cover any greater than -instance - 1.9450 for the commodity because you believe that the market is asking too much. To offer this trade to the market you'd say to this broker buy 1.9450 limitation. This implies if the market trades down to this price level your offer to trade in this price is live and in the trading arena. It does not mean that you will be filled unless you're full at 1.9450 or better, ie. 1.9450, 1.9449, 1.9448, 1.9447, 1.9400, etc.. .Get the thought.
    3. To the broker; Buy the Pound 1.9525 STOP. This informs the broker that if the price point of 1.9525 is touched, then you're inclined to enter the market at ANY price (market). This could signify a fill at ANY level; 1.9525, 1.9524, 1.9526, 1.9600, 1.9500, anyplace the asking trader is priced at. I personally don't trade with entry stops. ALWAYS use STOP LOSS orders once in a trade. It's better to be stopped out afterward brokeworse due your brokerage company $$.

    All my trades are put with LIMIT orders because, but not guaranteed a fill, in a fast moving market (news events, I'm sleeping, whatever), I'm filled in -or better- my price, or maybe not at all. Not filled at all than a bad fill such as 3. Call that slippage.

    I enjoy fills inside the spread because I'm more quickly proffitable.

    This sounds like a lot to digest but think of how much time it took to learn left/right, up/down, long/short, put/call, etc.. Exercise enough and it'll be second nature. Promise.

    Hope this helps,

  2. #12
    A breakout from a tight channel or nickname, or a tight straddle on a news event, things like that.

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