Fax to Email
Unlimited Faxes, No Fees, Dedicated Phone Number
Unlimited Faxes, No Fees, Dedicated Phone Number
Effective Order Placement I The Importance of Correct Order Placement Perhaps the weakest link in the trading chain is the use of orders. Albeit a rather boring topic, order placement is nevertheless a very important aspect of trading and investing. It is especially important in short-term trading where every penny counts. Using the wrong order can cost you, whereas using the correct order can save you money. There are three aspects of effective order placement that, if correctly carried out, will minimize your chances of error and maximize your potential for success. These factors are as follows: • Knowledge of the types of orders that can be used and when • Organization and follow-through in order placement • Knowing when to avoid certain orders as a function of market Let's examine these issues more thoroughly. Types of Orders Although there are relatively few types of orders, their correct and timely use is critically important. All too often traders misunderstand the meaning of certain order types and, on receiving a bad price execution of their trade(s), either attempt to blame their broker or find fault with the electronic network through which they placed their online order. A thorough knowledge of order placement can prevent errors and considerable frustration, as well as poor price fills (which cost you money). Since the advent of electronic order entry, it is even more important to understand and use orders correctly. Once an order has been placed electronically and confirmed, it is irrevocable. The result of the order is your responsibility; consequently, if you place an incorrect order electronically, the liability is yours alone. Since the late 1990s, when electronic order entry became widely used in many markets, I've seen traders commit serious and costly blunders, particularly in thinly traded markets or at times of the day when markets are not actively traded. To avoid becoming a victim, whether you are a professional or part-time trader, it is in your best interest to know what orders to use and when to use them. Even though the SSF market is an electronic market that offers transparent order execution (i.e., you know which market maker fills your order as well as the bids and offers), this fact alone doesn't guarantee a good price execution if you make a mistake. In order to better understand orders, let's follow an order from its inception to its culmination. Let's assume you call your broker and place an order to buy one contract of General Motors futures "at the market." Specifically, this means you are willing to buy at whatever price can be obtained for you when your order reaches the market maker. You can place your order either online electronically or through a broker who will place the order for you. Adding the broker to the equation increases the amount of time it takes to fill your order as well as the commission costs. stock investment ~ forex signal |