Entry Orders VS Market Orders

edge risk Mar 29, 2024

TIP: Using entry orders helps avoid forcing trades.

What are entry orders?

What are market orders?

What's the difference between Entry and Market Orders?

WHY ENTRY ORDERS MATTER:

– No unnecessary losses.

– You aren’t forcing trades.

Entry orders – applying patience in letting the market gently slide into your entry, rather than forcing it on live trade just because of one massive candle on the hourly. With an entry order, the market will let you know if you were correct in your short/long bias.

Market Orders – although acceptable in certain situations, is not a style I support for new traders. Market orders are live orders that trigger immediately after you click submit.

TAKE A LOOK AT THIS TRADE FOR AN EXAMPLE OF HOW AN ENTRY ORDER SAVED ME FROM AN UNNECESSARY LOSS: NZDUSD – https://www.tradingview.com/x/8CsMg8NR/

1hr in a rising wedge which is a potential trend change to the downside. However, 1hr and 4hr 50ema, were not confirming a move down, only a break and hover below the 50ema is on the 15min.

Potential for price to pull back and reject the 50 ema. The area of interest is when price is around/consolidating with the 50ema on any time frame.

1HR had nice momentum heading down but the 4hr closed bullish above the 50ema which has a heavier significance than 1hr and 15min on this position.

If I placed a market order (live execution trade) price would have skyrocketed me out of the position.

CONFIRMATION:

Be sure to set certain rules for when to get into the market and in the meantime, wait for the set-up to occur.

At this time, 4/20/2020, the price is still looking like it can collapse out of that rising channel. if a rejection on the daily 50 ema.

Potential: The market can be creating a bigger correction and break out, reaching the first resistance line.

Overall, I prefer entry orders and although I avoid Market orders, there are certain times that require it. For example, the exception I will have when placing a MARKET ORDER has a few rules:

1) the position was sized up properly well in advance with entry, target, and stop loss on trading view.

2) The trade must also be on my main watchlist.

3) The only time a market trade goes live for me is if a technical glitch occurs and

4) the market has moved to my entry-level. I will then place a market/live order if all 4 criteria are met.

Another problem with placing a market order: if by accident you place a trade, regardless of direction, the account is charged with commission/fees.

EXAMPLE OF HOW FORCING A TRADE RESULTS IN A LOSS – BAD TIMING: SPREADS: here is an example back in January 2019 of how I simply had an entry order set but was closed out within minutes due to high spreads during the new daily candle. Learn to stay out during the first few hours of the new day/especially the first day of a new week.

Mahalo for reading, happy trading all!

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