Stocks & Commodities V. 26:9 (53): Futures For You by Carley Garner
Product Description
Futures For You by Carley Garner
ON THE MINI-DOW
Assuming I am long a futures contract, how do I get a guaranteed stop-loss on the mini-Dow?
The truth is that stop-loss orders are never guaranteed. By definition, a stop order becomes a market order once the named price is hit or becomes the bid or offer. In the case of the mini-Dow, orders are routed and executed electronically so the slippage tends to be far less than what may be experienced in an open outcry environment. However, slippage can and will happen regardless of the venue. There is an order type known as a “stop limit” in which a trader can name the amount of slippage that she will accept, but this isn’t recommended because she may end up without a stop order working at all. This occurs if the market drops sharply enough to trade through the stop limit price without the stop being filled.
ON THE MINI-DOW
Assuming I am long a futures contract, how do I get a guaranteed stop-loss on the mini-Dow?
The truth is that stop-loss orders are never guaranteed. By definition, a stop order becomes a market order once the named price is hit or becomes the bid or offer. In the case of the mini-Dow, orders are routed and executed electronically so the slippage tends to be far less than what may be experienced in an open outcry environment. However, slippage can and will happen regardless of the venue. There is an order type known as a “stop limit” in which a trader can name the amount of slippage that she will accept, but this isn’t recommended because she may end up without a stop order working at all. This occurs if the market drops sharply enough to trade through the stop limit price without the stop being filled.
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