Hey swing traders, do you always use a limit order to get a trade going? Or will a market order work just fine based on your trade setup rules?
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I haven’t heard such a rule. In fact I haven’t heard of many people using limit orders at all - most trades seem to be opened using either a live buy/sell (which is obviously at market), or less often a stop order (at market).
I suppose it depends - on the entry tactic decided on for the strategy.
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Oh interesting. I thought maybe the traders on higher time frames used these more since they’re not at the screens all the time waiting around for that perfect entry. Compared to like scalpers.
Well I think they’re unpopular because a limit order is executed when price moves in the opposite direction to where you would hope it goes. For example, a limit buy order has to be set at a level below where price is right now: so price would be falling when the buy was triggered. Now this can work well, but it fails quite a lot plus it is counter-intuitive. Most traders will either buy or set a buy stop order where price is rising, either breaking out above a previous high, or rising away from a previous low.
you’re quite right about that part
there, i think (i’m pretty sure) you’re confusing “stop orders” and “limit orders”, where Tommor - above - is (rightly) differentiating between them
what they have in common is that neither is a market order (which scalpers use, as you rightly say)
i’m not a scalper - i’m trading from higher time-frames than scalpers are (though my trades are all intraday), so i’m using “stop orders”
it’s clarified here:-
Thanks for sharing. Boy, that’s confusing.
Stop orders can be buy or sell. Limit orders can be buy or sell.
SL and TP are limit orders, right? When would I use a stop order?
sorry
i sensed you were a little confused and hoped it would be clarifying/simplifying
all orders (market orders, limit orders, stop orders and stop-limit orders) can be buy or sell
they’re whatever you choose them to be - it’s your money and your choice!
if the price is currently below the level at which you want to enter long (if/when it gets up to that price) or if the price is currently above the level at which you want to enter short (if/when it gets down to that price), you’d use a stop order
my trading follows trends - i usually enter long a tick or two above the high of a bar in an uptrend, and i usually enter short a tick or two below the low of a bar in a downtrend, so i use stop orders a lot
(i think Tommor might be doing something similar/related?)
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Actually, it depends on the situation. When the market is volatile, I don’t do so actually.
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Actually, it’d not obligatory for you to maintain it as a rule. Sometimes I use limit orders whereas sometimes I don’t.
Hmm, sorry @flamingoproxy but this one answer is a rather confusing. Both SL & TP are exits, so assuming as an exemple that we are long, they are both sell orders. TP is a limit order, your automatic exit will sell if price climbs to a chosen level above current; SL is a stop order, your automatic exit will sell if price falls to a chosen level below current.
@samewise Hope this is clear.
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I’d like to provide a context on using limit orders. Typically, a contrarian trader who goes against the trend may use a limit order when prices move against them.
In the chart above, a major swing low support level has been breached, indicating a reversal of the main trend from bullish to bearish. The price is currently undergoing a pullback.
If the immediate week high resistance level is breached, long-term contrarian traders may choose to average down their position appropriately at each WHOLE number psychological level to mitigate the risk of drawdown. This strategy assumes that whole number levels serve as resistance levels that institutional traders use to set their target projections for booking profits.
Ultimately, if the price breaches the major swing HIGH resistance, the trader must still consider cutting their losses and keeping their risk under control.
