I'm practicing more complex order types for day trading. Please correct me if I'm wrong or there is some addon. Going LONG: Buying with Limit if Touched (you set it above market price). After you bought it, if you want to prevent a loss, create SELL STOP with protection order (it is set below the market price) For a favorable exit, you create a SELL LIT order (below the market price) Another option for a favorable exit would be to use a trailing order (a little bit confused on how)? Going SHORT Entering the position with SELL LIT order (you put it above the market price), once you buy it, you set BUY Stop with Protection order (above the market price) to prevent loss and you set a BUT LIT order to exit a short position with the gain. What is another option to put an order to exit a short position with gain?
Buying with a limit if touched order means that your limit will be below market price, and that you could (and will) miss trades. The market price needs to retrace a bit for your order to be filed. Buying with a stop if touched order means that you will buy above market price, be filed almost every time, but you will create a larger slippage. Regarding trailing stops IMO, if they are automated based on point or dollars (trail at $xx), you will never have the best outcome because market prices don't behave the same way all the time. If you trail like you decide how to enter and how to exit (On fundamentals, technicals, charting), you will have a better chance since they will follow your system/method logic.
I thought that buying with LIT prevents you of a sudden high volume orders, i.e. assume that the current price is 12$, you put BUY LIT order when touches 10$, limit 9.98$. Assume someone dumped a high amount of shares with SELL MARKET. The price fell to 9.4$, and someone put SELL order on 9.5$ before your order buy limit 9.98$ was activated. That is a possible scenario, right? What happens when one part has SELL on 9.5$ and another buy 9.98$? In Hong Kong, it seems that the difference is split between buyer and seller, but I don't know what happens on USA exchanges (obviously I'm using Interactive Broker).