What order type should I use?

[737ngx]

Hello, can someone tell me what order type to use in the following situation if there is one?
The strategy I am testing is based on going long on a stock only if the price reaches a specific price,
So say the stock is trading at 3 dollars but I will only buy if the price gets to 3,10, I would like
to place an order at 3,10 in advance even before the market opens ....

When I did this on the trade zero platform using a limit order, the price was around 1.95,
I placed an order at 3,00 but the order was filled at 2,05, about 1 or 2 seconds after entering the order
why did it not wait to get to 3 dollars first?

On tradezero free I have the following orders types:
1 = Market
2= Limit
3= Stop Market
4= Stop Limit
5= Range

Thanks a lot
Nic

 

[tomorton]

If their software was a bit smarter it would only allow you set buy stop orders at prices above the current market price and sell limit orders below it.

Usually, if you set a buy stop order at 3.10, and price is currently 1.95 and the market is closed, your order will be triggered if price reaches 3.10. If price opens above 3.10, the order will be executed at the first available price.

Don't forget to allow for spreads, the difference between the buy and sell prices. The normal spread can increase by 10 or 20 times around market open. This, plus the unpredictability of gap directions and sizes, makes "overnight" entry orders quite a risk.

 

[BigDeal]

It sounds like you placed a limit buy order (2) ie to buy at or below the price you specified, which is why it would have triggered immediately. What you needed to place was a buy stop order (3) which will wait for the price to reach your required level before execution

 

[MasterOfCoin]

...

When I did this on the trade zero platform using a limit order, the price was around 1.95,
I placed an order at 3,00 but the order was filled at 2,05, about 1 or 2 seconds after entering the order
why did it not wait to get to 3 dollars first?

On tradezero free I have the following orders types:
1 = Market
2= Limit
3= Stop Market
4= Stop Limit
5= Range

Thanks a lot
Nic

Hoi

In thus case, the 'limit' order is defining the maximum price you are prepared to pay for the stock. As the market price was below this, the order was executed at the next available trade. Usually, limit orders to buy a stock are placed below the current price, in expectation of the price dropping.

When you want (for whatever reason) to buy at higher than market prices, then you need to use a 'stop' order, as indicated in the preceding post (which was submitted as I typed this one)

Hope this clarifies things for you.

😁