Is a Market Limit order really likely to be filled cheaper than a Limit order? I know this is probably a very newbish question, but I would like to hear some solid answers.
you have market orders and you have limit orders. in my 30 years i have not heard of a market limit order. sounds like an oxymoron
You can place a "MTL" order with IB but I was just reading and apparently it isn't exactly the same thing anyway. With IB an MTL order is "Market-to-Limit". It is submitted to the exchange as a market order to execute at the current best market price. If the order is only partially filled, the remainder of the order is canceled and re-submitted as a limit order with the limit price equal to the price at which the filled portion of the order executed. So says IB's Help. But I think with other brokerages it is a little different. My impression from reading Andrew Aziz's book is that it is a market order with a limit attached. Not sure how that works, since a Limit order is supposed to execute at the lowest price possible but not more than the Limit amount. Kinda confusing since the author makes a point of saying he prefers placing Market Limit orders over either Market or Limit orders, typically at like 5 cents above the Ask. I have been placing Buy Limit orders at the Ask and get completely filled most of the time, and always at least partly filled. I just thought somebody might have a clearer picture of just what this type of order is, and how much better, if at all, that it is compared to a regular Limit order. Keeping in mind that I have only traded stocks, never forex.
"Cheaper" or at a better price, no. When you use a market order, you get a fill but have no control over that price. When you enter a limit order, you might not get a fill at all, but you are limiting the price you pay. I never use market orders except for MOC. I suggest you try limit order through the ASK by a small amount (Would vary as to the price and volatility of the stock) to add some control. E.G. XYZ is 45.05 x 45.07 and I want to buy 500 shares but don't care about a small amount of money as I want to make 0.50 to 1.00, I might enter an order to buy 500 XYZ at 45.10. If the stock runs while I'm hitting send, I'm will to miss it and decide later if I want to change my limit or cancel vs a MKT order where if it runs up I might end up pay a level I'm not a buyer. On Lightspeed Trader (and most of our other software, we offer the ability to place this in a hotkey or hot button.
In case of buying, it’s just a limit order above the ask, vice versa for selling. The idea is that market orders are literally just blank cheque’s. See enough flash crashes and odd spikes, theirs no reason not to use a marketable limit order. If their is a market below the limit price it will clear like a market order but not above your limit. Market to limit is just as you said it is. Your really just looking for a limit order, nothing fancier.
Let's say to want to buy 300 shares of XYZ. NBBO is 10.00 x 11.00 1. You send market order, get filled: 100 @ 11.00 100 @ 11.50 100 @. 12.00. Ouch 2 You send limit order to buy at 11.75, get 100 @ 11 100 @ 11.50 The other 100 is limit @ 11.75 3 You send MTL order, you get 100 @ 11.00 The other 200 becomes limit @ 11.00 So you get the benefit of getting the best offer without guessing where best offer will be, but you also get protected from slippage. I've never used it and you probably should not either.
I was just trying to figure out Andrew Aziz's suggestion in one of his books to use that type order and I didn't see what the difference in outcome could possibly be from a plain old Limit order. I have been using limit at the ask. When I don't get filled I either don't worry about it or just nudge the order price up a tick or three.