[Trader's Handbook] Draft articles, "out of pocket" discussions - page 2
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hrenfx is conceptually correct.
Well then a further clarification is needed at the very least.
and after the clarification to the explanation )
maybe this will clarify things. *
Sell Limit Order. Forex.
This order in the Forex market, always executed at Bid price and above the current market ask price (in our example 1.4990).
You decide to sell the Euro when its price is 1.5000. You click the Sell Limit button, set the number of lots, for example, 10, and specify the price at which you would like to sell at 1.5000 and thus, you are saying to the broker - "Dear Broker, when the price of the Euro is 1.5000, I would like to sell 10 lots of the Euro". OK, says the broker, I understand, I will send your order to the banker right now and if he decides to buy at this price, I think he will do everything right.
The moment has come when the banker announces that he is ready to buy the Euro at 1.5000. Our broker reminds the banker about your bid, the banker tells him - no problem, but before you, I received bids that they want to sell euros at 1.5000, so now I am ready to buy only 20 lots, and I have 25 bids. 20 were sent before you, and 10 came from you, so dear, like a decent banker I will buy those 20 and your 5 first. Since the banker was only able to buy 5 of your euro lots, the broker had no choice but to buy only 5 accordingly.
In other words, you have set your Sell Limit order at 1.5000, and when the Bid price came to this price, you could only buy 5 lots at this price, but exactly at the price that you had specified in your order. This is the basis of this order. The quantity may not be enough, but the price is strictly the price specified in the order. That is 1.5000.
Sell Limit order. Futures.
This order on the exchange, always executed at Last price and set above the current market bid price (in our example 1.5033). The best practice is to focus on the Last price on futures and practically set the order above the Last price.
Be careful. This is the fundamental difference between order execution on the stock market and on the forex market. Never forget that in the forex market you see charts drawn at the Bid price; in the stock market you always draw a chart at the Last price.
You decide to sell a Euro futures when its price will be on the market at 1.5039. You click the button Sell Limit, set the number of contracts, for example, 10, and indicate the price at which you would like to sell at 1.5039 and thus you tell the broker - "Dear broker, when the price of the Euro is 1.5039, I want to sell 10 Euro futures contracts". OK, says the broker, send the order and you will see that it is displayed in the stock market. You press the Send button and you will see that your order has hit the exchange and at 1.5039 the number of orders must be changed from 80 to 90 (in the example).
The time has come when the Last price has come to 1.5039. If we say that the Last price has come, it means that at least one deal at this price was concluded for 1 contract out of 90.
And since there was a trade, the invisible fun starts at this price level at 1.5039. The sellers want to sell 90 contracts. You have 10 to sell, you are last in line, based on our example. If there are buyers for 90 contracts or more, then your order will be executed in full.
What are the options here?Situation one.
If there are buyers for 80 contracts only, it means that your order will be executed and the price Last will return to the price of 1.5038. So, you will see that the price seems to be at the level of your order, but it is not executed. It happens.
Situation two.There were only 85 buyers for 85 contracts, so they will execute all the orders and 5 contracts from your order and the price of the Last will return to 1.5038. So you will see that the price seems to be at the level of your order and only 5 contracts have triggered, but strictly at the price 1.5039. And this happens.
Situationthree.The buyers have only 100 contracts, that means that 90 contracts will be filled, the price will rise to the level of 1.5040, the sellers will sell another 10 contracts and the price will come back to the level of 1.5039.
You should always be aware that if the Last price is even a tick over the price you entered in your Limit Order, then your order must be filled in full and at the price you entered in it.
Let's assume that in our example there are more buyers than sellers, i.e. you have set your Sell Limit order at 1.5039 and when the Last price comes to this price, all 10 contracts will be executed exactly at 1.5039. There cannot be any other price variations, only variations with the number of contracts.OK, what does level3 have to do with the execution of selimit at bid and bylimit at ask?
Because level3 is essentially market orders -- stops and margin calls. It's not clear to me. Or correct me if I'm wrong. I understand that they are not available to mere mortals, but it helps to know.
It all makes sense about the flipper.
Essentially at the time of order execution the flipper is equal to the ask for selimit. And in fact, it is equal to asc and bid if the limit is filled by a limiter.
But how can selligit be executed by bid if it is filled by a market order?
OK, what does level3 have to do with the execution of selimit at bid and bylimit at ask?
Because level3 is essentially market orders -- stops and margin calls. It's not clear to me.
Everything is clear about the flipper.
In fact, at the moment of order execution it is equal to the ask for sillimit. And in fact, it is equal to the ask and the bid if the limit is filled by the limit.
But how can selligit be executed by bid if it is filled by a market order?
the bid price is the price of the best buy order when we hit the market with a buy order (we say market entry is actually the same as limit).
If we look at the order, it immediately triggered, but in fact it was handled by the exchange algorithm that solves the situation with bid >=ask
so it turns out that the sell limit is always triggered by a bid.
The Bid price is the price of the best Buy order when we hit the market with a Buy order
So, this is where you took in a lot of air, filled your brain with oxygen and thought about what you wrote.
everyone is confused by the Bid/Ask + Buy/Sell correspondence
We have to separate these two notions in some way.
On the one hand you want to buy at the market - you will buy at Ask price, but it turns out that you will buy the Sell Limit that comes to you first. The market has found you a counterparty.
but then the Sell limit should actually trigger the Ask (instead of the Bid).
Therefore, to respect the laws of the genre - at the moment of triggering (Market Buy and Sell Limit) - Spread = 0
+ the system broadcasts Last for the Sell Limit price.
As soon as your order is filled - Spread will again widen by the distance of the nearest Buy Limit below and Sell Limit above.
am i right or wrong?
(say market order entry is actually the same limit)
we took another breath here.
- Limiters do not slip to the negative side. unlike market FOKs
You should always be aware that if the Last price is even a tick over the price you specified in your Limit Order, then your order must be executed in full and at the price specified in it.
Only if there is enough volume to buy
This is the point - if the price reached your limit - it may fill, but not completely.
But if the price exceeded at least one tick over your limit - it means that your order should already be filled 100%, because the price went to pick up the limiters further.
Only if there is enough volume to buy
Read it carefully -- if the flipper has passed. There are no options here.
How do you get fixed if you have a volume/price of 0.1/1.5039 to sell and 1.0/1.5040 to buy?
If it is 1.0/1.5040 to sell, it will be executed as last, and 0.1/1.5039 will hang there without being executed.