Market order it is... again.

I think that I have given up on limit orders for more than the reasons mentioned in a previous post, that of missing the entry by a few pennies. Not only would that problem be solved but another more insidious problem may be rectified.

Upon setting the limit order where I want to get in the trade, and the price I set is a little low, I see that I tend to hold the order rather than cancelling it and often...often enough... that point is actually beyond the point where I should be getting into the trade. Determined to be right I leave the order in place only to have to close the position as it keeps moving the wrong way.

Market orders, on the other hand, have the advantage of being executed quickly, getting me in when I want and allowing me to make the decision based on the information at the time... not delayed into the future by an unknown amount of time. I do need to be aware that I should not use them when volatility is high though, but when there is enough depth on both the ask and bid side of the quotes to fill at the price that I want at that moment.

Now, back to the "a little low". Without the limit order in place I would not have placed a market order as the price was slightly too high for me, if it is out of my risk range...and this is the key. I set my limit within my risk range for the trade setup at the time, but the setup changes as time progresses.

With an active order in play I have a "want" to be right. With no active order I will be more apt to not place the order in the first place, re-evaluate the setup and decide once the price does move into range whether I still see a good trade idea...WITHOUT ANY PRIOR BIAS TOWARD MY OUTSTANDING ORDER.

No matter which order I use I will not chase a price but wait for a decent pullback into some level of support.

So, setting a limit and missing a price move for the sake of pennies or placing a market order that may cost a penny? I could post many charts and moves that limit orders have kept me out of and as many that they have gotten me in when I should not have been in.

I'll go for the higher cost as the price of missing the moves that I have missed outweighs that small cost. This is mostly a head game for me as I recognize my tendencies as I track my trades and ideas in my journal. I understand the benefit of a limit order but it does not suit my current trading style.

Caveat... I must use good judgement and not get caught in placing market orders just to get into a trade quickly.

Jeff.