Order Types for Futures Traders

NinjaTrader supports a number of order types to provide traders with customized and precise entry and exit methodologies. Understanding the purpose of each order type will aid in a trader’s ability to proficiently enter and exit the market. The following tutorial provides a breakdown of the differences between market, limit and stop orders.

Market Order:

A Market Order is the most basic and frequently used order type. When executing a Market Order it instructs NinjaTrader to communicate with the exchange and execute your order at the next best available price.

For example, if you place a Buy Market Order the fill price will be the next bid. If a Sell Market Order is executed, the next available bid will be the fill. The price discrepancy between the Last Price upon placing the Market Order and the price at which the order is filled is known as the Spread.

Limit Order:

Limit Orders permit traders to designate a minimum or maximum price when selling or buying an order, respectively. Because the price action may never reach the designated price, it’s common for traders to miss market entries using limit orders. Additionally, Limit Orders are filled on a First in First Out basis (FIFO), thus the market may touch the limit price several times without a fill due to previous orders resting in the exchanges queue.

Stop Order:

Stop Orders are most commonly used to minimize or “Stop” a loss on a long or short position. However, Stop Orders can also be used to enter the market. A Buy Stop Order can be placed above the current market price, and a Sell Stop Order is placed below market. Upon price touching a Stop Order, the order functions like a Market Order and will be filled at the best available price.

Stop Limit Orders:

In an attempt to gain more control over the price at which Stops are filled, Stop Limit Orders requires designating two price points. The first price point resembles a traditional Stop Order as described above. The second price point specifies the limit price.

For example, once your stop is triggered (first price point), you do not wish to be filled beyond the defined limit price (second price point).

Profit Target Order:

Profit Target Orders are placed at predetermined price points enabling traders to specify the amount of “Profit” he/she is willing to accept before exiting the order. Typically determined by risk/reward ratios and other forms of technical analysis, Profit Targets are the opposite of Stop Loss Orders and both are key components to NinjaTrader’s ATM Strategies.

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