Explain/define Limit, Stop and Stop Limit Orders

[steve2222]

I have tried looking for this in the Help guide and searching in the forum.

Is there a simple guide/explanation of the above types of orders and when one should be used versus another including the pros and cons of each?

Thanks

[sledge]

http://www.investopedia.com/terms/s/stoporder.asp

Originally Posted by steve2222

I have tried looking for this in the Help guide and searching in the forum.

Is there a simple guide/explanation of the above types of orders and when one should be used versus another including the pros and cons of each?

Thanks

[steve2222]

Thanks,

So that confirmed what I believed were the differences.

So I only use Chart Trader to place and mange orders/trades. I do not use an ATM. I use AutoHotKeys placing orders based on pointer/curser position.

AutoHotKeys emulates right clicking on the mouse and selecting one of the three order options.

My question is: with Chart Trader and the right mouse click, why is there no option to place a Sell STP order above the market or a Buy STP order below the market.

Say I want to go long, I use AutoHotKey to place a Buy Stop Limit so I only get into the trade if it trades at my price I placed the order at. But for my profit target I want to get out if price hits my target, even if I am not filled at this price, hence I need to place a Sell STP order so I get out at market. Currently I can only place a Sell LMT order which means if price touches my target does not fill me and falls back I don't get taken out.

Why does Chart Trader not allow you to place Sell STP above market and Buy STP below market?

[NinjaTrader_Jason]

Hello steve2222,

Unfortunately, you cannot submit a sell stop market order above the market price or a buy stop market order below the market price. If you try this in the SuperDOM, you will receive a rejection error.

You can submit a limit order instead.

[steve2222]

Thanks Jason.

Just for my understanding and learning, can you explain why this is so? Is it an exchange limitation eg the CME?

If instead I was using an ATM to place orders would this mean the profit target (in the case of a long) would also be a Limit order and not a Sell Stop order?

[NinjaTrader_Kyle]

Hello steve2222,

I can offer no more clarification than to say that it's the agreed upon convention for this order type and is not specific to the exchange.

You are correct that a limit order would be used in the situation you outlined.