So Ive been making notes on the types of orders section. It mostly makes sense except the on triggers the other (OTO) order type. I get the concept but example shown makes no sense to me. It states that they believe price will rise to 1.2100 but also states they will place a stop loss at 1.2100. Could anyone give a better example by any chance it would be greatly appreciated.
I haven’t seen this page but I belive that the woridng could cause confusion because it does not differentiate between the bid price and the ask price.
For example, if price on the chart is at 1.2000 you might wish to sell if it goes higher and reaches 1.2100. Le’s suppose the spread is 0.0100. Most charts are set by default to display the bid price, the price at which you would go short. so at bid price 1.2100 the sell order triggers and also causes the stop-loss order at 1.2100 to be set. But the SL order is set at an ask price of 1.2100 so it would be triggered at the same price as the enytry order but only if the bid price fell to 1.2000, as the spread is 0.0100.
Always remember that the chart price only shows one of the quoted prices, and it’s usually the bid. Do not forget the spread betwen the bid and the ask.
For example, you place a ‘buy limit’ order at 1.2000. You also set an OTO order with a ‘take profit’ at 1.2200 and a ‘stop loss’ at 1.1950. Once your buy order executes at 1.2000, your OTO order gets triggered, placing both the take profit and stop loss orders automatically.
The stop loss and expected price rise would not be at the same level, as it would defeat the purpose of the trade.
are you sure it says they will place a stop loss at 1.2100?
might it say that they will place a stop order at 1.2100?
that would make sense, wouldn’t it, if the price is now below 1.2100 and they think it will go up to 1.2100 and that’s where they want to enter a long position, if it does?
i enter all my trades by stop orders (buy-stop for long positions, sell-stop for short positions), so i’m wondering whether that was what it meant, but there’s no link and of course the people responding here to your question haven’t seen the page, so it’s pretty hard to tell?!
this may help you …
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