Pros & Cons Of Limit Orders
In this episode the Blokes discuss the pros & cons of limit orders. Jonathan and Rory both discuss how & when they use limit orders in different situations.
Both Jonathan and Rory highlight that the advantages usually heavily outweigh the disadvantages. It allows you to target a specific target price & have that order waiting to execute even while away from the computer, meaning you will never miss an entry. Most part-time retail traders can’t sit in front of a screen 24/7, so by placing limit orders it allows traders to semi automate the process.
Rory explains that the only slight disadvantage is in highly volatile markets where the trade can be executed and hit a stop loss in a matter of seconds however, chances of that are very slim out of the covid cycle.
Jonathan explains using limit orders correctly can allow you to find optimal entry levels rather than executing a trade at the wrong time. Also limit orders can be highly beneficial when price is trading within a range. For example, If an asset has a strong range and is continuously finding support and resistance at the same levels, orders can help remove any doubts.
Similarly both Jonathan and Rory agree that on larger one off trades, limit orders are useful for not missing a big move in the market. For example; recently when Gold hit 1800, before it was there, a lot of people would have thought it was a great level to buy. However, when price reached 1800, people were afraid to buy, having this order in place would have removed any psychological doubts & this will help you trade more objectively.
There is no doubt that if used correctly limit orders can improve your success rate & limit your screen time!
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Hosts
Rory McMullan- Host
Rory is a final year student studying Accounting and Finance in London, He started his trading journey over 2 years ago but has came quite far in the process. He traded most asset classes starting with FX and Commodity trading, trading crack calendar spreads within the energy market to now running his own Long/Short equity options portfolio. The book that he trades is a systematic, top-down bottom up equity portfolio.
Rory has a strong passion for the financial markets and really hopes he is able to be of assistance to anyone either starting their trading journey or looking to further their knowledge.
Jonathan Farrelly – Host
Jonathan started his trading journey over 15 years ago, learning from some of the best institutional traders in the world.
Over the last 9 years Jonathan has taught 1000’s of retail traders how to successfully navigate the financial markets.
He has evolved Two Blokes Trading with new technologies to offer traders a new fully immersive experience.
Jonathan’s ethos has always been based on transparency with the goal to help new & experienced traders achieve their goals.
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