STOP orders vs LIMIT orders, when to use which?

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Hi,

I'm curious, when (or rather how) do you choose to open a Pending STOP order vs a Pending LIMIT order?

 

maybe you should read about the basics....


you have to use STOP or LIMITS depending if you want to place the order above or under the current price


//z

 
I know that, my question is more about strategy...
 
i use stops in breakout strategies and limit in trendfollowing and rangetrading strategies
 
Thanks for the tip! Just curious, how do you distinguish between breakouts and trends? I have been using the slope (i.e. the velocity) of the Volume-Weighted-Moving-Average (VWMA) as an entry-condition, so the EA BUYs if the slope is positive, and SELLs if the slope is negative. It works fairly well except at the very top (or bottom) of the trend, so I use the volume as an indicator for the end of the trend. This strategy works fairly well in trends, but it needs to be refined for breakouts.
 

A limit will buy/sell at that price or better. a stop becomes a market order when market reaches the price.

If you open a buy limit at 1.5 and the current price is 1.3 it will open immediately since 1.3 is a better buy price. If you want to buy at 1.5 and the current price is 1.3 a buy stop will wait until the price reaches 1.5 and then becomes a market order.

 
vgoklani:
Thanks for the tip! Just curious, how do you distinguish between breakouts and trends? I have been using the slope (i.e. the velocity) of the Volume-Weighted-Moving-Average (VWMA) as an entry-condition, so the EA BUYs if the slope is positive, and SELLs if the slope is negative. It works fairly well except at the very top (or bottom) of the trend, so I use the volume as an indicator for the end of the trend. This strategy works fairly well in trends, but it needs to be refined for breakouts.

My breakout strategy places only trades after a sideways market. they are easily to spot if you only need to now that price WAS ranging...

//z

 
zzuegg:

My breakout strategy places only trades after a sideways market. they are easily to spot if you only need to now that price WAS ranging...

//z

you need some practice to see it. any advise?
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