For example to sell contracts at or above $2.00 (suggested exit price)
if an investor is in a position, a sell limit
order can be placed at or above $2.00. There is, however, always the possibility that
not enough trades go through at that price and that the order will
not be filled. On the other hand, the System will closes its position,
regardless of whether of not the particular order was filled. An
investor
might still be able to sell your contracts at a lower price later the
same day or the following day. If a
sell limit order is placed $0.05 below the suggested exit price (in this
particular example, at $1.95), the fill will be guaranteed, assuming
at least one trade goes off at $2.00 (i.e., at the suggested exit
price). If this happens, the System closes the position at $2.00,
while the order is filled at $1.95, which means the profit will be
slightly diminished, but the fill guaranteed. But selling $0.05 below
the suggested exit price can have a benefit: it is possible that the
order will be filled yet the suggested exit price is not reached
because the price moves lower. This is to the advantage: the system
�missed� the trade while an investor was able to sell.
In conclusion:
- In cases where the suggested exit price is hit,
having placed the sell order at a slightly lower price will reduce
the profits somewhat, but guarantee that the order will be filled;
- In situations where the suggested exit price is
never reached, having placed the sell order at a slightly lower
price enables to sell the position, whereas the System does not
exit the trade.
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