Three Trade Entry Methods
There are three primary methods used for entering trades, each designed to capture different market behaviors:
1. Market Order Entry
- Executes immediately when a specific market condition exists.
- Simple and effective for immediate execution but may experience slippage.
2. Limit Order Entry
- Executes when:
- A specific market condition exists AND
- The market moves to a better price (e.g., below the market price for longs or above for shorts).
- Captures pullback behavior and ensures a more efficient price with zero slippage.
- If the market condition exists but the price doesn’t move into the limit order’s threshold, the order is canceled because the conditions were not fully realized.
3. Stop Market Order Entry
- Executes when:
- A specific market condition exists AND
- The market moves through the stop market threshold (e.g., above market price for longs or below for shorts).
- Captures breakout behavior and sudden heavy price swings that occur within a bar (intrabar).
- If the market condition exists but the price doesn’t cross the stop market threshold, the order is canceled.
Why Are Orders Canceled?
Canceled orders are a normal and expected part of trading strategies, especially for limit and stop market orders. Reasons include:
- The price never reached the threshold for the order to execute.
- The market conditions were met, but the price failed to move to the required level before expiration.
Important: Limit and stop market orders enable intrabar execution for strategies that calculate logic at the close of each bar. This functionality isn’t possible with simple market orders alone.
Specific Notes on Nasdaq Orders
- For Nasdaq (NQ) futures, stop market orders may be rejected if the price is set too close to the market price.
- Example: A stop market order for longs must be placed above the market price. If the price is set just 3 ticks away, the Nasdaq’s volatility may cause the order to fail or reject.
- These rejections are normal but ensure that:
- The instrument and contract month are correct.
- The time series is properly set (e.g., 40-second bars).
Order Duration Rules
- Entry Orders: Typically exist for up to 40 seconds before they are canceled if the conditions are not met.
- Exit Orders (Profit Target/Stop Loss): Remain open as long as there is an active position.
- End of Session:
- Positions and orders should close before the session ends.
- Note that the trading session is not the same as the calendar day (e.g., today's session may have started two hours ago).
When to Investigate Further
Canceled orders are expected, but issues may arise if:
- Orders are open for less than 30 seconds.
- Instruments or contract months are incorrect.
- There are repeated rejections outside of expected behavior.
If these symptoms occur, double-check your settings or seek additional support.
