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Forex day trading order executed early

Explanation Of The Pattern Day Trading Rule (PDT),ASK or BID?

Which Order Can Be Executed Immediately? Markets orders are orders to buy and sell securities at current market prices. A full execution will take place when this order is placed. In the primary sense, a market order has that crucial feature of guaranteeing fulfillment. The price that will be charged on the order does not, however, guarantee execution Pending orders, such as stops and limits, can be executed End of Day (EOD) or Good 'til Cancelled. EOD orders automatically expire at 5pm New York time on the same day the order Please note that multiple factors may impact execution speed, including but not limited; market conditions, platform type, network connectivity, trading strategies, and account type. Market orders are day orders as they are executed at the next available price. However, an expiry value of End of Day (EOD) or Good Till Cancel (GTC can be submitted for all other Market orders are day orders as they are executed at the next available price. However, an expiry value of End of Day (EOD) or Good Till Cancel (GTC can be submitted for all other order ... read more

This is because ASK price red line should touch the TP level to close a SELL trade. Imagine how confusing it will look like with the trailing stop or break-even functions. I get many questions about this from people who use my Trader On Chart application, but the same happens no matter what app you are using or even trading manually. Everything is clear about the TS and BE for BUY orders. But BE and TS functions for SELL orders are applied using ASK price which is not recorded on the chart.

The simple explanation here is that people calculate those 11 pips incorrectly. They calculate the profit of the SELL order by subtracting lowest BID price from a SELL entry price. In our example, it was 11 pips. But actually, it should be calculated by subtracting lowest ASK price from a SELL entry price, because SELL orders are closed at ASK price. The confusing part here is that no one actually knows what ASK price was at that moment exactly because it is not recorded on the chart.

But in our example, if the spread was 1. So, unfortunately, the break-even function was not executed because the price had to move another 0. I place a BUY STOP pending order and create a screenshot immediately when it is executed. You can see that BID price price bar did not even touch the pending order open price, but it got already filled because ASK price touched it.

But because price bars on the chart are drawn using BID price you will actually see price touching the pending order. Actually, the rule is the same. BUY LIMIT gets filled at ASK price while SELL LIMIT gets filled at the BID price.

However, the confusion can be created here when bar price BID price touches the BUY LIMIT order but it is not filled. It should be that way because BUY LIMIT only gets filled when ASK price touches its entry price, but many traders still get confused at this. See the image below. I have a BUY LIMIT pending order where BID price already touched it. Obviously, it was not filled yet. So like you probably already understand, in this example if the price were to reverse now and go up without ASK price touching the entry price , my BUY LIMIT order would not get triggered even though on the chart you would clearly see that the price bar touched the entry price and even fell below it.

The same with SELL LIMIT orders. If you have a SELL LIMIT order it will only be triggered when BID price touches it. However, you will not experience the same confusion like with the BUY LIMIT. It would clearly be seen if price bar touched the SELL LIMIT entry price of not. Ask line can be red, and Bid line can be gray default. When you are ready for a BUY setup then only look at the red Ask line and ignore the grey Bid line.

When you are about to close a BUY trade look at the gray Bid line only. When you are ready for a SELL setup then only look at the gray Bid line and ignore the red Ask line. When you are about to close a SELL trade look at the red Ask line only.

It does not matter when you learn about the confusing ASK and BID prices. Do not be ashamed if you did not know about this. I have created dozens of trading tools for MT4 years ago without even understanding this. But when I finally learn this it opened my eyes to feel the market much better. I am also a Forex trader, a programmer, an entrepreneur, and the founder of ea-coder. com Forex blog. I have created two of the most popular trade copiers and other trading tools for MT4 that are already used world wide by hundreds of currency traders.

Another reason orders are not always filled which is missinterpreted for slippage, is banks choose whether to fill your orders or not, this applies for ECN and not a market maker model. In this recent article it becomes more so a fact. Thanks much Mr Rimantas, Nice article with pretty acute description. Actually, I know about this but were unable to make someone understand so perfectly.

I can remember that one of friends asked me to resolves this confusion, I tried to explain but that was not so perfect like yours one. The new question is — can we adjust this in MT4 so it is easier to know how to set SL.

Because some of these differences between the Bid and the Ask are as much as 30pips. we cannot adjust difference between Ask and Bid prices. This comes from the broker and this is literally their fee. You can only choose different broker if you want to have different spread, as each broker can have different spreads.

Thanks, bud. Really helpful. I was pulling out my hair thinking of ways to avoid getting in prematurely, superficially adding 10 pips to my buystop or something, but now with your insight, I can be more specific and confident as to wth was going on!

Thousands of people should be thankful in my opinion. Great content and explanation. The truth is, i was unaware of commission on both buy and sell deal! This works for both Market and pending orders. i fully understand your explanation above. but i want also to know about stop loss order.

should my stop loss cater allowance of the spread if i have a specific stop loss level. For example , say eurusd. Should i enter 1. or no need. Thanks for the article. It is very helpful. I just wanted to add something that may makes it easier for remembering which price to look for. Every time we Buy, we buy at Ask price. Now to get out of that Buy order, no mater it is take profit or stop loss, we need to Sell the same amount of lots.

And as every time we Sell, we sell at Bid price, then it means for a Buy order to close, it will be at Bid price. It is the other way for Sell orders of course. Notify me of followup comments via e-mail. You can also subscribe without commenting.

Skip to content Share on Facebook. This is why BUY trades were executed. ASK or BID? MT4 chart with Ask price line red color visible. Also, let me explain how this affects the profit taking. SELL trade did not hit TP yet even though we see price bar already fell below the TP level. What about Trailing Stop and Break Even? Yes, this happens rarely, but still, it does and then a lot of traders get confused.

BUY STOP is filled when ASK price reaches the entry price. BID price price bar did not even touched it yet. BUY LIMIT was not filled when BID price price bar reached the entry price.

It will get filled only when ASK price touches it. How to make it easier? This works for both, market and pending orders. Conclusion It does not matter when you learn about the confusing ASK and BID prices. Will you tell me the truth in the comments below? This can help amplify returns in a dramatic way, but keep in mind that leverage is a double edged sword, and it will act to amplify losses as well. Well, there are a few ways that traders can bypass the PDT requirement. Below you will find a few options to consider.

Execute A Maximum Of Three Daytrades Per Five Days — If you only make three day trades or less within a five day time window, you will not be subject to the PDT status. As such, this option would mean that you could still day trade, but your trading volume would need to be sufficiently less than what most day traders engage in.

If you have a strategy or system that trades only a handful of times per week, then you may be able to make this work. But even assuming your daytrading strategy calls for initiating one trade per day, that would equate to five trades a week, thus opening you up to the pattern day trader designation. You could implement additional filters into your daytrading strategy in order to reduce the number of trades per week to stay within the FINRA requirements.

In some cases, filtering your trades more may allow you to improve your system, while reducing your overall trading costs. Consider An Offshore Broker — The PDT rules outlined here pertain to US-based traders that fall under the authority of FINRA regulations. As such, one way to get around the PDT trading rule is by tapping into equity markets outside of the United States.

There are a wide array of very liquid stock markets around the world including those of Canada, Germany, United Kingdom, Australia, Japan, Singapore and more. Since brokers in these jurisdictions fall outside FINRA regulations, you will likely be able to bypass the day trade pattern rule as it applies to US-based brokers. However, do not always assume this to be the case, as laws are ever-changing and certain jurisdictions may have agreements amongst each other with regards to this.

Join a Proprietary Daytrading Firm — There are quite a few proprietary daytrading firms that are in existence as of this writing. Many of these firms provide both infrastructure and other support for aspiring day traders. Each proprietary day trading firm is different and will have their own corporate guidelines for dealing with its daytrading partners. That is a deep subject in and of itself, however, those that are experienced in this area know that the costs and frictions associated with daytrading can be quite cumbersome.

That is to say that making consistent profits from daytrading equities can be quite challenging to say the least. One of the best ways to reduce costs and frictions associated with daytrading is to switch to a more longer-term trading horizon.

This could come in the form of swing trading, which is more of an intermediate term style of trading. Swing traders generally hold positions for several days to several weeks. Additionally, traders can consider an even longer-term horizon by implementing a position trading approach.

Position traders generally hold trades for several weeks to several months if not longer. And so, by transitioning to a longer term time horizon, you can bypass all of the PDT related rules and regulations. Open An Account With Multiple Brokers — To avoid the pattern day trader rule, you may consider opening multiple brokerage accounts. This way, if you require five day trades per week you will be able to do so across these two accounts without triggering the PDT designation.

In other words, you might place three day trades within one brokerage account, and then two day trades within the second brokerage account.

This will allow you to stay under the radar while achieving your daytrading requirements with your capital base. We discussed some of the ways that undercapitalized traders can try to avoid the PDT FINRA rule.

Some of these ideas might resonate with you, while others may not be feasible. One other consideration that we have not yet discussed, but deserves attention is transitioning from daytrading the stock and stock options market to another more favorable venue for daytrading. Remember, the PDT day trading designation only applies to the equity markets; no such rule applies to the other markets that we will discuss shortly. Many traders and investors who start off in the financial markets tend to do so within the context of the stock market.

There are many reasons for this, but the fact remains that new traders and investors are most familiar with the equities market and thus gravitate towards that market over others. There is nothing intrinsically wrong about doing this, however, those traders that will ultimately want to take a shorter-term view in the market through daytrading activities need to be aware of the drawbacks of the PDT status. Here are some alternative markets that stock market day traders should keep an open mind about, particularly if they fall under the pattern day trader umbrella.

Forex Market — The foreign exchange market is the largest market in the world. Currencies trade in pairs, meaning that you are betting on the movement of the exchange rate, which is comprised of two currencies traded against each other. Although trading currencies may seem daunting to newcomers, many of the mechanics of trading currencies are similar to that of the stock market. However, instead of betting on the direction of a specific stock or ETF, you are betting on the price movement of the exchange rate.

The leverage at US-based Forex brokers is generally capped 50 to 1. Futures Market — The futures market is an extremely popular venue for day traders. Most futures brokers offer their clients access to stock index futures, agricultural commodity futures , metal commodity futures, interest rate futures, currency futures , and more.

By far the largest and most influential exchange within the United States is the Chicago Mercantile Exchange , CME. Trading futures has many advantages over other markets. Futures daytrading margins can be very nominal compared to the traditional equities market, and traders can go short just as easily as they can go long.

Over the last few years I have received and answered literally thousands of emails to my customers and one of the most interesting questions I get was this. My BUY trade was triggered without price reaching the buy line or pending order. What would cause a trade to trigger early and how I can avoid it? This is actually just a simple misunderstanding, but I found that a lot of people do not know about this, so I feel obliged to explain this.

Now to explain this in detail, so you could understand what this problem is about, I created a screenshot on my MetaTrader 4 see below. This is a trading session using one of my trading tools , but the same can be seen even if you trade manually using pending orders.

Look at the picture above. This is a perfect example. See the price range box and its upper level? This is how my Range Box Trader works. You set it up to open trades on a breakout of a previous price and time range.

Trading begins only when the price range is set at the specified time, which is considered the beginning of your custom trading session. For example, you set the price range box to be created from until This means at EA will draw a price range, create two pending orders, one at the top and the other at the bottom of the range box, and start trading until of the next day or whatever settings you use.

Let me explain what has happened here. The explanation is very simple. BUY orders are executed at ASK price, but MT4 charts do not show ASK price by default. This is why on the chart it looks like the trade was filled too early without price touching the entry level. The ASK price is always above the current price BID you see on the chart. The price on the chart is a BID price. This is why it looks like price did not touch the breakout line. I remember how confusing this was for me several years ago, so let me try to explain it in a more simple way.

Every trading instrument has ASK and BID price. The difference between those prices is called The Spread. Say if ASK price is 1. In human language, this equals 12 points or 1.

When you BUY open LONG position you always buy at ASK price. When you SELL open SHORT position you always sell at the BID price. Now because price bars on the MT4 charts are created using BID prices you never see what ASK price was before.

You can only see current ASK price if you enable it to be displayed on the chart. Below is the image which shows ASK and BID prices visible on the chart. I mean when you close a BUY trade you close it at BID price while it was opened at ASK price. When you close a SELL trade you close it at ASK price while it was opened at BID price.

So this means that to hit a stop loss of a BUY order — the BID price should touch the stop loss level. To hit a stop loss of a SELL order — the ASK price should touch the stop loss level. To hit the take profit of a BUY order — the BID price should reach the TP level.

So if you have ASK price visible on your chart you will actually see how the ASK price reaches the TP of your BUY order, but it will not close the trade at TP level yet. The BID price should reach your TP to close the BUY order.

Now it is much more interesting with SELL orders. To hit the take profit of a SELL order — ASK price should reach the TP level. This means that your SELL order will not hit TP when you see the price bar BID price touch the TP level even if it falls below TP level. This is the case that got confused a lot of traders for sure. They open a SELL trade, leave it to run for hours or days and when they come back they see that the price bar was actually at the TP level or even crossed it by a few pips but the trade was not closed.

In the image above the SELL, trade did not hit TP yet, even though we see price bar BID price already fell below the TP level. This is because ASK price red line should touch the TP level to close a SELL trade. Imagine how confusing it will look like with the trailing stop or break-even functions.

I get many questions about this from people who use my Trader On Chart application, but the same happens no matter what app you are using or even trading manually.

Everything is clear about the TS and BE for BUY orders. But BE and TS functions for SELL orders are applied using ASK price which is not recorded on the chart. The simple explanation here is that people calculate those 11 pips incorrectly. They calculate the profit of the SELL order by subtracting lowest BID price from a SELL entry price.

In our example, it was 11 pips. But actually, it should be calculated by subtracting lowest ASK price from a SELL entry price, because SELL orders are closed at ASK price. The confusing part here is that no one actually knows what ASK price was at that moment exactly because it is not recorded on the chart. But in our example, if the spread was 1.

So, unfortunately, the break-even function was not executed because the price had to move another 0. I place a BUY STOP pending order and create a screenshot immediately when it is executed. You can see that BID price price bar did not even touch the pending order open price, but it got already filled because ASK price touched it. But because price bars on the chart are drawn using BID price you will actually see price touching the pending order.

Actually, the rule is the same. BUY LIMIT gets filled at ASK price while SELL LIMIT gets filled at the BID price. However, the confusion can be created here when bar price BID price touches the BUY LIMIT order but it is not filled.

It should be that way because BUY LIMIT only gets filled when ASK price touches its entry price, but many traders still get confused at this. See the image below. I have a BUY LIMIT pending order where BID price already touched it.

Obviously, it was not filled yet. So like you probably already understand, in this example if the price were to reverse now and go up without ASK price touching the entry price , my BUY LIMIT order would not get triggered even though on the chart you would clearly see that the price bar touched the entry price and even fell below it. The same with SELL LIMIT orders.

If you have a SELL LIMIT order it will only be triggered when BID price touches it. However, you will not experience the same confusion like with the BUY LIMIT. It would clearly be seen if price bar touched the SELL LIMIT entry price of not.

Ask line can be red, and Bid line can be gray default. When you are ready for a BUY setup then only look at the red Ask line and ignore the grey Bid line. When you are about to close a BUY trade look at the gray Bid line only. When you are ready for a SELL setup then only look at the gray Bid line and ignore the red Ask line. When you are about to close a SELL trade look at the red Ask line only. It does not matter when you learn about the confusing ASK and BID prices. Do not be ashamed if you did not know about this.

I have created dozens of trading tools for MT4 years ago without even understanding this. But when I finally learn this it opened my eyes to feel the market much better. I am also a Forex trader, a programmer, an entrepreneur, and the founder of ea-coder. com Forex blog. I have created two of the most popular trade copiers and other trading tools for MT4 that are already used world wide by hundreds of currency traders.

Another reason orders are not always filled which is missinterpreted for slippage, is banks choose whether to fill your orders or not, this applies for ECN and not a market maker model.

In this recent article it becomes more so a fact. Thanks much Mr Rimantas, Nice article with pretty acute description. Actually, I know about this but were unable to make someone understand so perfectly. I can remember that one of friends asked me to resolves this confusion, I tried to explain but that was not so perfect like yours one. The new question is — can we adjust this in MT4 so it is easier to know how to set SL. Because some of these differences between the Bid and the Ask are as much as 30pips.

we cannot adjust difference between Ask and Bid prices. This comes from the broker and this is literally their fee. You can only choose different broker if you want to have different spread, as each broker can have different spreads.

Thanks, bud. Really helpful. I was pulling out my hair thinking of ways to avoid getting in prematurely, superficially adding 10 pips to my buystop or something, but now with your insight, I can be more specific and confident as to wth was going on! Thousands of people should be thankful in my opinion. Great content and explanation. The truth is, i was unaware of commission on both buy and sell deal!

,Closing orders

blogger.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, London Wall, London, Please note that multiple factors may impact execution speed, including but not limited; market conditions, platform type, network connectivity, trading strategies, and account type. Which Order Can Be Executed Immediately? Markets orders are orders to buy and sell securities at current market prices. A full execution will take place when this order is placed. In the primary sense, a market order has that crucial feature of guaranteeing fulfillment. The price that will be charged on the order does not, however, guarantee execution 23/9/ · The pattern day trader, also referred to as PDT, is a designation given to traders that execute four or more day trades within five trading sessions and do so in a margin account. 19/10/ · The most significant difference between a market order and a limit order is the time and conditions at which the order is executed. Compared to a basic market order, limit Market orders are day orders as they are executed at the next available price. However, an expiry value of End of Day (EOD) or Good Till Cancel (GTC can be submitted for all other ... read more

Actually, the rule is the same. It should be that way because BUY LIMIT only gets filled when ASK price touches its entry price, but many traders still get confused at this. That is to say that making consistent profits from daytrading equities can be quite challenging to say the least. com Forex blog. The actual pattern day trader designation falls under the rules of the Financial Industry Regulation Authority, or FINRA. Say if ASK price is 1. But when I finally learn this it opened my eyes to feel the market much better.

Daytrading is a very popular style of stock trading especially for novice market participants. com Forex blog. Keep doing great work! The ASK price is always above the current price BID you see on the chart. Josh December 12,

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