STOP LOSS Flashcards
LIMIT ORDERs
market orders with a limit price
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
LIMIT ORDERs
market orders with a limit price
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
LIMIT BUY order:
sets the max price we want buy for
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
LIMIT SELL order:
sets the min price we want sell for
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
When we want to simply BUY
do not use simple market order < risk of slippage!
xx
xx
xx
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
CFTC
CFTC: Commoduty Futures Trading Commission
Order book
The collection of open buy side and open sell side orders for any given financial instrument
the set of all open orders
Seller side
ASK
what the sellers offer for buyers
upper part (higher price range)
right side part (higher price range)
https://www.dropbox.com/s/4ty4qcq58rpgipq/Screenshot%202019-04-22%2009.28.25.png?dl=0
https://www.dropbox.com/s/feqn1cmec0m0h3s/Screenshot%202019-04-22%2009.30.36.png?dl=0
Buyer side
BID
what the buyers offer for sellers
lower part (lower price range)
left side part (lower price range)
BID: kinalat, BIDders, supply, offer, bid
https://www.dropbox.com/s/4ty4qcq58rpgipq/Screenshot%202019-04-22%2009.28.25.png?dl=1
https://www.dropbox.com/s/feqn1cmec0m0h3s/Screenshot%202019-04-22%2009.30.36.png?dl=1
You have a (market) BUY order > SLIPPAGE : what is it about?
if our order can not be satisfied with the lowest price on the seller side (can not totally fill your order with the lowest possible)
then it will move up to the next lowest asking price >> SLIPPAGE
RISK of market orders!
slip can be high if we place large orders… or in case of a flash crash
Limit orders advantage
we can set a limit how much Slippage can happen
When Selling we need to set
When Selling weneed to set a minimum price (limit order)
When Buying we need to set
When Buying we need to set a maximum price (limit order)
Buy Limit orders taker/maker position
Buy Limit order on the Buy side >> Maker
Buy Limit order on the Sell side >> Taker
(both protects from Slippage)
https://www.dropbox.com/s/1j20okiilbi5yzs/Screenshot%202019-04-22%2010.08.04.png?dl=0
https://www.dropbox.com/s/7kq496fizlos7na/Screenshot%202019-04-22%2010.12.45.png?dl=0
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
Sell Limit orders taker/maker position
Sell Limit order on the Buy side >> Taker
Sell Limit order on the Sell side >> Maker
(both protects from Slippage)
https://www.dropbox.com/s/lk2nv4vfaq1me4v/Screenshot%202019-04-22%2010.09.18.png?dl=0
https://www.dropbox.com/s/7kq496fizlos7na/Screenshot%202019-04-22%2010.12.45.png?dl=0
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
STOP order
STOP (market) order:
Market order with a stop price (determines when the market order dispatched in the orderbook
>> delayed order: delayed until the STOP is triggered)
Similar to Limit orders, instead of a limit price they will have a Stop price > but similar permutations > 4 configurations
can have limit price > STOP LIMIT orders > 16 config
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
STOP order - Limit order - STOP LIMIT order
STOP order is a Market order with a stop price
Limit order is a Market order with a limit price
STOP LIMIT order is a Limit order with a stop price (still at the STOP tab at Coinbase ?? (confused about it)
https://www.dropbox.com/s/ec48kl1hsi27w83/Screenshot%202019-04-22%2010.32.54.png?dl=0
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
When is the Sell STOP triggered?
triggered when the price <= STOP price
when the price goes below the STOP price
https://www.dropbox.com/s/mstpctszqg6hzsg/Screenshot%202019-04-22%2011.03.02.png?dl=0
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
When is the Buy STOP triggered?
triggered when the price >= STOP price
when the price goes above the STOP price
https://www.dropbox.com/s/mstpctszqg6hzsg/Screenshot%202019-04-22%2011.03.02.png?dl=0
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
STOP Sell order warning
Sell side market order will be triggered when the price will be equal or less than STOP price
It will be executed at the highest bid (the highest bid what will be set in the future when the STOP price is triggering the market order dispatch;
if at that time there is a big sell off > the market price can run down extremely quickly
> our market order might take very low price…
>> slipagge risk, we get a warning notification) >> the price can be even lower…)
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
The practical STOP Sell order configuration
STOP Sell order: Stop is on the Buy side
the Sell order is not dispatched immidiately (delayed)
Taker
Executed when the price goes below the STOP price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
The impractical STOP Sell order configuration
STOP Sell order: Stop is on the SELL side
the Sell order is dispatched immidiately (not delayed) >> not practical
it would be a Taker still
Executed when the price goes below the STOP price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
Sell STOP order, Ask side
Sell STOP order: Stop is on the SELL side
the Sell order is dispatched immidiately (not delayed) >> not practical
it would be a still a Taker
Executed when the price goes below the STOP price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
Stop price is on the ASK side
ASK side: The stop price is above the market price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
Stop price is on the BID side
BID side: The stop price is below the market price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
BUY side STOP orders delayed until
the last price >= stop price
the price goes above/hits the stop price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
The practical STOP Buy order configuration
STOP Buy order: Stop is on the ASK (Sell) side
the Buy order is not dispatched immidiately
delayed: waiting for the trigger, the price goes above/hits the STOP price
Taker
Executed when the price goes above the STOP price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
The impractical STOP Buy order configuration
STOP Buy order: Stop is on the BID (Buy) side
the Buy order is dispatched immidiately (not delayed, the price is already at lower level)
>> not practical, equal to the Buy Market order
it would be a still a Taker
Executed when the price goes below the STOP price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
All STOP orders are
STOP Buy order when?
STOP Buy order when
we want to buy at a higher future price
to close a short position (to stop the loss if price goes upwards)
in case of a breakout strategy
Does NOT protect from Slippage (warning)
the Buy order is not dispatched immidiately
delayed: waiting for the trigger, the price goes above/hits the STOP price
TAKER
Executed when the price goes above the STOP price
https://www.dropbox.com/s/yqaqs9ossrtxlt7/Screenshot%202019-04-22%2012.03.31.png?dl=0
Stop Limit order
Delayed Limit orders:
once the trigger condition registeres as true > a limit order is dispatched to the orderbook >
matching engine matches as we saw before
warning: the order may not fill in immidiately
STOP LIMIT orders danger
no garantee for matching
in the gap between the STOP and the LIMIT we can find the bids potentially matching our sell order,
but no garantee, especially if the gap is small or the price is dropping sharply
https://www.dropbox.com/s/ibr2sf9xi99fxnm/Screenshot%202019-04-22%2012.21.33.png?dl=0
https://www.dropbox.com/s/ybt2z1glvyzvuyh/Screenshot%202019-04-22%2012.23.11.png?dl=0
STOP LIMIT Buy order trigger
When the price rising goes above/hits the Stop price
Limit above the the Stop price
When trigger: the lowest asking price will be under our LIMIT price (our max price willing to pay)
Impractical STOP LIMIT Buy order
Stop is above the Limit price
When the STOP triggered: the lowest asking price would be higher than our max (Limit)
The price would be needed to fall for our order to be filled
It would be a maker
if Limit is above the Stop > practical and taker, but this is the price we have to pay to make sure that our order gets filled
https://www.dropbox.com/s/16ixvvsyocltqwd/Screenshot%202019-04-22%2012.38.19.png?dl=0
when BUY LIMIT orders?
Buy Limit orders: when we want to get sg for a cheaper price (we want to set a maximum price)
When we want to BUY lower;
When we want to wait untill the price goes down to a certain level > buy only then
just like market orders, but they have limits
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
When we want to simply BUY on the current market
Slippage danger > do not use simple market order
Buy Limit Order (ALLOW Taker must be selected)
Limit on the ask side >>Taker postion
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0
When we want to simply BUY, but without fees
BUY LIMIT order
limit on the BID side >> maker position, no fee
https://www.dropbox.com/s/hqdrlu0hznrphmx/Screenshot%202019-04-22%2019.33.44.png?dl=0