One Eyed Shark
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Depends on how you enter the market.
If you use a limit order with the limit set at the entry price then your slippage will be zero.
Only downside is that you may miss some fills, but if you have your order in the queue early enough you should not have many problems.
If you use a limit order with the limit set at the entry price then your slippage will be zero.
Only downside is that you may miss some fills, but if you have your order in the queue early enough you should not have many problems.
Directional
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yep, also slightly dependant on what size your trading as well, but since you are asking this question then I'm assuming you are not going to be throwing many 100 lots around.
if you're buying a 1 lot on the bid with a limit, and theres 100 contracts already quoted there, then you'll need to wait for that lot to be filled or pulled before you get your fill. If it trades through, then you get your price with no slippage. If you got the direction right then chances are you might not get filled because if you're waiting to buy and the market is going up, there wont be too many sellers to fill you.
Problem with using limit orders is that although you dont get slippage, if you're right on the market direction chances are that you wont get a fill, if you're WRONG on the direction.. you will ALWAYS get your fill because the market will trade through your entry before stopping you out.
If you have confidence in your methods when trading directionally, and you arent dependant on working limits in the market for your edge then you should factor in paying up the spread and hitting the ask for a tick slippage with a market order/marketable limit order. This way you'll always be in the market when you got your direction right.
if you're buying a 1 lot on the bid with a limit, and theres 100 contracts already quoted there, then you'll need to wait for that lot to be filled or pulled before you get your fill. If it trades through, then you get your price with no slippage. If you got the direction right then chances are you might not get filled because if you're waiting to buy and the market is going up, there wont be too many sellers to fill you.
Problem with using limit orders is that although you dont get slippage, if you're right on the market direction chances are that you wont get a fill, if you're WRONG on the direction.. you will ALWAYS get your fill because the market will trade through your entry before stopping you out.
If you have confidence in your methods when trading directionally, and you arent dependant on working limits in the market for your edge then you should factor in paying up the spread and hitting the ask for a tick slippage with a market order/marketable limit order. This way you'll always be in the market when you got your direction right.
Directional
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depends on the market - 1 tick = 1 minimum price incrementandrewbee said:
in the dow 1 tick = 1 pt ($5); in the S&P 1 tick = 0.25pt ($12.50)
