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DOM at Limit

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I read somewhere that CME allows to place a buy limit order above the current price and a Sell limit order below current price. (Can’t be done on CBOT).

The OEC DOM set as follow:

Dom Options/Additional/Allow Limit Above Mkt is checked by default so it is able.

 

My question is what will be the advantage of buying at limit above the price.

Can the big players manipulate the market doing so? For a small trader, is the transaction quicker and more reliable?

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Not sure this will answer your question 100%, but I only enter on buy stops and sell stops. I want price to be moving in my direction, not against it.

 

That is my sentiment too, but if it is possible and the DOM has been design to allow it, it must be for a good reason.

Let say I place a buy limit, one pip above current price, my bid will be taken straight away( at that price 1 pip above market), in that case will the transaction be processed quicker than at market?

I try to figure out what will be the advantage, may be for large traders to jump the queue, no ideas??

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It sounds to me like you are describing stop limit orders.

 

If your OEC DOM is set as describe in post 1 (which is the default), moving your mouse pointer on the bid ladder above the current price will give you 2 options:

Right click: limit

Left click: stop

The buy stop order is the right command use to catch the train up at a defined level.

My question is why someone would use a limit order above the current price?

What's your opinion?

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The buy stop order is the right command use to catch the train up at a defined level.

My question is why someone would use a limit order above the current price?

What's your opinion?

Allow Limit above Market is nothing funky. In theory there is no need for this because you could as well use a market order. But think of volatile times when bid/ask is moving too fast to follow and you want a tight entry at a certain price level or better. Without this feature everytime you enter the limit above market (by accident) it would get rejected. By using Allow Limit above Market you will get the fill at the best ask (if long) or bid (if short) but never worse than what your limit was. You can't ensure this by using market orders.

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If your OEC DOM is set as describe in post 1 (which is the default), moving your mouse pointer on the bid ladder above the current price will give you 2 options:

Right click: limit

Left click: stop

The buy stop order is the right command use to catch the train up at a defined level.

My question is why someone would use a limit order above the current price?

What's your opinion?

 

It's actually left click limit and right click stop on my end. Not sure if you are able to reverse those or not.

 

If you send a buy limit ABOVE current price, you will be instantly filled at that price OR better. That's what a limit order is - fill me at this price or better.

 

Test it out on the demo and you'll see what I mean. You send a buy limit above the current price and you'll basically be buying the current price, possibly with slippage. That's all.

 

You can use this when you think sending a market order will get you a very poor fill - so you send a limit to the exchange saying - fill me here OR better and I'll be happy.

 

To get a fill that says - only fill me if this price is hit - then you use a buy or sell stop order. You can use a stop market order or stop limit order from there.

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If you send a buy limit ABOVE current price, you will be instantly filled at that price OR better. That's what a limit order is - fill me at this price or better.

 

I did experiment using the demo; the fill was at the entered price, whatever it was 1, 2 or 4 pips above. I will test a bit more, just curious!

Also in that case will the buy above price be filled from the respective ASK pending position or from the ASK first on line (last ASK)?

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I did experiment using the demo; the fill was at the entered price, whatever it was 1, 2 or 4 pips above. I will test a bit more, just curious!

Also in that case will the buy above price be filled from the respective ASK pending position or from the ASK first on line (last ASK)?

 

If you sent a LIMIT order above for a buy or below for a sell, it fills right away on OEC. Did you turn something else on? Are you sure you aren't sending a BUY STOP or SELL STOP order? B/c a buy limit order sent above will fill right away; vice versa for a sell. That's how the orders work. Take a screenshot so I can see what you did b/c based on what you said so far, it doesn't make sense at all.

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You are right the fill is not pending, it occurs at the price entered, I have to test a bit more , not a big deal as it’s not a command I use, I was just curious to find out if others traders were using it and if it could be of any unknown, effective use :-)

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I’ve done couple more tests, the behaviour is as you described going long or short I got filled instantly at market. When the market is more active it could end up in different results, I’m not sure as I got filled 2 pips away previously two days ago.

Thanks brownsfan your help was appreciated.

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I’ve done couple more tests, the behaviour is as you described going long or short I got filled instantly at market. When the market is more active it could end up in different results, I’m not sure as I got filled 2 pips away previously two days ago.

Thanks brownsfan your help was appreciated.

 

In essence you are sending a market order but with a restriction. That's it. If you got filled away from the market, it was still a good order although it may have looked like a crap fill.

 

If you want to get in right away w/o hitting the market button or sending a limit above/below, you can submit a limit order AT the current price and usually get filled.

 

Example - price is sitting on the ES @ 1103.00 on the bid side. You can send a limit order to sell @ 1103.00 or buy at 1103.25 and both will fill almost instantly most of the time. You are sending a limit order, just at the current bid/ask difference.

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