I'm confused by this discussion. How can MIT orders have any directional bias if they are executed when touched, from either direction, above or below the market??? Because you only place MIT orders below the market if you are buying, and above the market if you are selling. Hence, the only way for your order to get filled is if the market corrects. Stop orders are the reverse, hence for your stop order to get hit, the market has to rally for buy stop or decline for sell stop. MIT orders are often used in place of limit orders when buying dips/selling rallies where you want to be sure you're in the market even if you don't get the best fill.
Actually, if you call in a stop order, and the market is through your stop price when the order gets to the pit, it becomes a straight market order, not a market if touched order. Correct, this is what I was saying. If someone places a "stop" order below the market, intending it to be an MIT order, when it gets to the pit it will be filled as a market order. When you call in an order your order desk will tell you if the market has already traded past your stop order (if you were placing a stop order but meant to place an MIT order). At least the good ones will always check the current quote before confirming your order. How I do not miss the "old days" calling every 15 minute "hi, I'm calling for a quote." Many brokers still have "quote desks" which are separate lines that you call just to get quotes by phone. You can't place an order just get quotes. That job must be fun. Maybe all the interns and first-year brokers get to work the quote desk.
"Because you only place MIT orders below the market if you are buying, and above the market if you are selling." That's what's confusing about this discussion. Are you saying that MIT orders can ONLY be placed in this manner, or that this is how you typically use them? The above discussion refers to the case where the price needed to turn around to hit the MIT price for it to be executed, implying that it can be hit from either direction. So which is it? Are they executed when HIT (as name and discussion would suggest) or only when HIT FROM ONE DIRECTION? Thanks.
"Because you only place MIT orders below the market if you are buying, and above the market if you are selling." That's what's confusing about this discussion. Are you saying that MIT orders can ONLY be placed in this manner, or that this is how you typically use them? Yes, they can ONLY be placed in this manner if you are calling in an order to your broker. There has to be a way to distinuish between a "stop order above the market" and a "stop order below the market" because "above" and "below" are relative terms. What was above when you called in an order may be below by the time it hits the floor. Some electronic order entry systems do not make a distinction between "stop" and "MIT" order because the order entry system knows what the current market price is at the time you place your order. Other order entry systems will not allow you to place an MIT or stop order in the wrong direction (again, b/c it knows what the current market price is).
They work exactly the same, but with one concern. The "touched" part has a different meaning on the trading floor. You are entitiled if you are traded through, but not if the future simply trades at your price. The "touched" part can be used to trigger a larger order in the direction desired by the floor traders.
>Some electronic order entry systems do not >make a distinction between "stop" and "MIT" >order because the order entry system knows >what the current market price is at the time >you place your order This is the case with my brokers (IB, MB, ProTrader). They just call them all "stop" order types. I'm glad to learn about this though, in case I run into it somewhere. JB
I place IB sell stops *both above and below the market* Just a follow-up, I did a test today and placed a buy stop below the market with IB for NQ eminis and it was executed immediately as a market order. This is the same treatment it would get if I was sending an order to the floor. In this case it was Globex2, same result. Are you placing buy stops below the market with IB for stocks or futures?
>Are you placing buy stops below the market >with IB for stocks or futures? Stocks. Do it all the time and even as we speak I have multiple stops in on both sides of the market. JB
If you put in a "buy stop" (trigger) for say $40, and the stock is trading $42, then the trigger will go off immediately unless you make the limit stop read "or lower" ... Reverse for the sell order. And you have to mark them "opening" or "closing" trades as well... Either I am missing something in the discussion, or just the text is confusing.
Yes, that is why you would use an MIT order if buying below the market. That is how it has always been for sending orders to the trading floor. The point of discussion is that with IB, Tuork can place buy stops below the market and sell stops above the market and have it act as an MIT order, not an immediate market order. I cannot duplicate this with Globex2 orders.