What type of order best to enter? Does it even matter?

Beginner Questions
1

Let us explore the question what type of order is best to enter the market?

Or does it even matter how we enter the market?

Three types of orders.

  1. Market orders. Buy or sell at current best bid or offer.

  2. Buy stop or sell stop. Pending order at a level you expect the market to break through and gain momentum towards your target.

  3. Buy limit or sell limit. Pending order at a level where you expect the market to continue in current direction but no further before reversing to a target.

Here are my thoughts.
As a small retail trader the impact my entry order type will not have much effect. But if like myself everyone else trying to go in the same direction as me used pending orders together as a team we would just be absorbing all the market orders in the opposite direction but never push the market in our direction. So in conclusion I think though my impact may be small it is better to use market order and be an active participant. After all the ocean is made of countless numbers of drops of water. Sure my impact may be like a drop in the ocean but if all the drops one day decided to never return to the ocean after evaporating the ocean would eventually shrink.

2

I started out market orders like 2 years ago. Moved to limit orders pretty quickly to enter after a couple months on demo. And in the last 3 months, after getting caught on the wrong side of a lot of trades after my initial entry, trying to get a better (lower) market entry, now I’m using buy stops more. I haven’t done the analysis in the last 3 months on every trade so I can’t say if it’s 100% working all the time. But it feels better entering when price is moving in the direction of where I want price to go.

Market orders, at least when I use them, tend to me more reactive and even emotional at times.

I’m trying to do less.of that. Wait for a pullback and breaking through some market structure or S/R level.

3

My experience in practice supports this plan.

2 Likes
4

I was stuck for a long time always trying to get a better price on entry, only for price to completely reverse on me. Probably a function of also not being away of fundamental events and market structure and S/R levels, and maybe being more patient and waiting for clear trends to form. Or at least not enter right around key levels!

5

This is a really sad thing to say, but “the trend is your friend”. I have recently been paper testing a new plan that I call “crypto meme coin sniping”. I had to switch my normal brain off to get into this but I will shortly (within a month) most likely assign a portion of my crypto bank to this fascinating practice. When new crypto meme coins first come to market (and there are tens of them per day), at least 90% appear to be rug pulls. The one minute timeframe is that on which entry and exit decisions are made, and the one second timeframe is used to either get out in a hurry either way (profit or loss) or ladder out / ladder in. I did not believe this until I observed it myself, but there are a number of 3X opportunities within minutes without leverage. I intend to set up a post on here when I have more “paper trading” results. Right now it is very early days. I am setting up and modifying my trading rules. I have a keen partner in the EU timezone and we will track paper results together to halve our time to market.

6

It depends on the trading strategy. There are strategies where entry points are formed by indicators in real time. Therefore, you need to enter the market here and now. And if you trade, for example, using support and resistance levels or sloping channels, you can also place limit orders.

7

Man, thanks crazy fast! Is that bots affecting price at those levels?

8

Yes, bots are all over the place but I am learning how to identify the bots and how to chart all the trades of each individual participant in an app.

You actually need to use a bot but only to set up shortcut one mouse click actions that normally require 2 or 3 clicks. It is my understanding that unless you have very fast execution times, and pre-set a maximum spread and slippage you could be in big trouble. These trades are not done through conventional centralised brokers. I have four simultaneous apps to master at the same time. A telegram account, an intermediate crypto account set up in an application acceptable to the telegram app, a Solana network based bot and an app called Dex Screener. Oh, and another couple of apps for identifying “risky” trades - as if there is not already enough risk. It is interesting, keeps me off the streets, and satisfies my ADHD style curiosity.