Newbie question

I'm new to trading...been doing it a few weeks now.

I recently switched brokerages to tradestation and they do things differently then my old brokerage.

I recently just f&*k'd myself and was wondering if someone can lend a hand. I could call tech support, but I'm a little embarassed to say I don't know.

If I want to place an order to go short, but the market is currently above my entry position, do I place a SELL LIMIT order? It was my understanding that the word "limit" implied the market would have to hit that specific number before my order would be filled. However, when I placed the limit order, it was filled immediately (2 points above where I intended).

I have a SELL LIMIT order placed above the current market that worked fine. I'm lead to conclude that I can only place sell limit orders when the market is below the value I intend to go short at.

Am I incorrect? Where is there a simple tutorial for us new kids?

A limit order to sell will fill at your limit price or better.

In this case, with the market trading above your limit price, it filled immediately at the better (higher) selling price. In essence, your limit order acted like a market order and filled you at the highest bid.

graysqwrl - I'm sorry to hear about what happened.

I'm not familiar with TradeStation but I think what you wanted to place was a STOP LIMIT and not a SELL LIMIT.

Here is a SuperDOM screen courtesy of NinjaTrader which I use:


If I wanted to go short at 11550 when the market traded down there then I believe that I'd need to use a STOP LIMIT order down there. If I wanted to go short at a price above the current bid/ask of 10558/10559 then I'd use a SELL LIMIT at (say) 10565.

If I placed a SELL LIMIT order at 11550 right now for 1 contract then I would normally be filled at 11558. i.e. the best price down to but not exceeding 11550.

A SELL LIMIT order below the market is the same as a MARKET SELL ORDER with 1 difference. The LIMIT order ensures that if the market drops between the time that you place the order and the time that the exchange receives the order (usually less than a second) that your order will not sell for less than your limit and will become a resting limit order at the specified price in the event that the market suddenly dropped.

Let me know if this makes sense...

Thanks

Rookie mistake. At least I learned from it