Chart Trader SLM and LMT order clarification

[tulanch]

Within Chart Trader, I was wondering if a Sell SLM order with a value of 0 behaves identically as a Sell LMT order does?

I have a trading strategy I want to sell at a specific price that is below the current market price.

It is my understanding that when the mouse location is above the market price and I press the right mouse button, I can set a Sell LMT order. But when mouse location is below the market price and I press the right mouse button, I can only set a Sell SLM order.

If I read things correctly, if I set the value to 0 for the SLM it should trigger a limit order at that price since the offset is 0. I have also defined the default 0 value for this SLM value in the chart trader properties to expedite order placement.

I would expect these two orders to be identical based on the 0 setting. Is this correct?

[NinjaTrader_Chip]

Hello tulanch,

Thank you for your post.

The Sell SLM with a ‘0’ offset would behave differently than a Sell Limit order. These are two different orders. The SLM is a Stop Limit whereas the other is a Sell Limit.

Please let me know if you have any additional questions.

[tulanch]

I'm still not clear on this and I have read numerous other links and forums on this.

Here is what I am doing....

I have a "counter trend" setup that works using Limit orders. For example if the trend is downward and I see this specific pull back setup forming, I know where I believe the market will resume back to the downside and thus want to short it at this Price X. Because of how the NT interface works, at this moment in time, I simply move the mouse above the current market price and I am able to create a Sell Limit order at this Price X as it is above the current market price. Once this order is filled, I then enter a Buy limit order just below it at my profit target. I am doing this manually via the Chart Trader interface and this approach is working great.

Here is what I am trying to do....

I also have a similar setup but it involves a "with trend" entry. In this situation the NT interface does not allow me to set a sell limit order below the current price as it would automatically fill - which totally make sense to me. Thus I want to use a SLM order for this purpose. For example if price is falling, based on my setup, I know at a price Y below the current market price is where I want to enter short and I only want to enter short if the market hits this price. I want to use a limit order to control slippage as much as possible and to ensure I get a short entry at this specific price Y that is below the current market.

From what I read about the SLM orders input value, it controls the trigger price for the creation of the SLM Limit order.

"Stop Limit Order is a stop order that immediately becomes a limit order when the stop is triggered. So you need to define the trigger and limit price values."

With NT you define these price values using an offset value. Thus it seems logical if this value is 0, both the trigger price and the limit order price are one in the same. If the SLM is set to Price Y with an value of 0, once the market hits Price Y, this SLM order immediately becomes a Limit order at Price Y. Is this true? And if so, is it not safe to consider a SLM order with an input value of 0 as a Limit Order of the same type ( buy/sell)? Or is the term “immediately” the issue as there is some inherent time involved for the order to become a Limit order and thus you are somewhat at the mercy of the markets FIFO queue.

I know the NT simulator is very close to the real thing, but in practice I have found to be slightly different. I have tried this in simulation and it seems to work as I have indicated, but I hoping to get the full understanding before I try it live.

[NinjaTrader_Jason]

Hello tulanch,

"If the SLM is set to Price Y with an value of 0, once the market hits Price Y, this SLM order immediately becomes a Limit order at Price Y. Is this true?"

This is correct. However, you will run the risk that the market trades through your order during volatile periods. Using an offset zero means the stop limit order will only fill at the price you submitted it. For example, if you use an offset of 6, the sell stop limit order can fill between the price it is resting and 6 ticks below this price.

If you submit a sell limit order below the market price, it will fill right away since this is the better price. If you want such a sell order to fill at the price you submit it, you will need to use a stop limit order.