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Pending limit orders execution

Jun 30 2015 at 06:39
4 ieraksti
There's a big difference between pending orders. Or, at least, should be.

Stop orders (= buy stop, sell stop, stop loss) become market orders when triggered. That's a rule as you're in a price (liquidity) taker role with them.

Howewer, with a proper broker, limit orders (= buy limit, sell limit, take profit) shouldn't become market orders, since you're effectively not a price taker, but a price maker there - your limit orders should hang in the orderbook for other participants to be filled. Per definition, they should be filled at the exact quote, or not filled at all.

But apparently, in our MT4 retail world, most 'brokers' don't adhere to these key principles at all. Those who do let you place limit orders inside the spread, one U.S. based broker even pays you for your limit orders that get filled because with limit orders, you're actually providing (instead of consuming) liquidity.

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