Weekly Insights: Different Market Orders and When to Use Each

Different Market Orders and When to Use Each


A  customer signed up for my service the other day and asked about stops and different types of market orders. They were good questions, and they reiterated to me the fact that I have subscribers that range from seasoned trading professionals to those who are testing the futures’ trading waters for the first time.

One thing I always like to point out to the less-experienced traders: There are no “dumb” questions and there is no shame in being inexperienced. Every single futures trader that ever walked the face of the earth has been inexperienced at one point.

This feature on types of market orders, including stops, may be a refresher feature for the more experienced traders, and will likely be a more valuable feature for the traders newer to this fascinating field.

Market Order

The market order is the most frequently used futures trading order. It usually assures you of getting a position (a fill). The market order is executed at the best possible price obtainable at the time the order reaches the futures trading pit.

Limit Order

The limit order is an order to buy or sell at a designated price. Limit orders to buy are placed below the market; limit orders to sell are placed above the market. Since the market may never get high enough or low enough to trigger a limit order, a trader may miss getting filled if he or she uses a limit order. Even though you may see the market touch your limit price several times, this does not guarantee a fill at that price.

“Or Better” Orders

“Or better” is a commonly misunderstood order type. You should only use “or better” if the market is “or better” at the time of entry to distinguish the order from a stop. “Or better” on an order does not make the pit broker work harder to get a better fill. It is always the broker’s job to provide you with the best possible fill. If an order is truly “or better,” then this designation assures the broker that you have not left “stop” off the order. In many instances, unmarked “or better” orders are returned for clarification, potentially costing the trader valuable time and possibly a fill. Orders that are not “or better” when entered only serve to better use the pit broker’s time upon receipt as he checks to see whether or not the order deserves a fill.

Sometimes, using the “or better” designation before the opening is helpful in assuring the broker that your order is meant to be filled.

Market if Touched (MIT) Orders

MIT orders are the opposite of stop orders. ‘Buy’ MIT orders are placed below the market and ‘sell’ MITs are placed above the market. An MIT order is usually used to enter the market or initiate a trade. An MIT order is like a limit order in that a specific price is placed on the order. However, an MIT order becomes a market order once the limit price is touched. A fill may be at, above, or below the originally specified MIT price. An MIT order will not be executed if the market fails to touch the MIT specified price.


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