Friday, September 4, 2009

09/04 TOS Contingent orders

A blog reader asked me about how do I set up the contingent orders on TOS, I've posted bellow a real example of an order I had Today on the MNX Iron Butterfly. Notice a few things:

1) I usually will give up a bit of money from the "mid" price, the way I think about it, it is the cost of doing business where I'm paying the market maker to take care of my trade without forcing me to be staring at the screen all day. I give up a bit of money, but they take care of the trade while I'm on the day job.

2) I learned the hard way NEVER to have an order running as soon as the market opens (see second area in green). I have my orders trigger about 30 min. after the market has opened. Why? If there is a gap, the order will trigger right away with whatever prices are comming in the TOS pipeline. I had a RUT contingent order once trigger at a price 10 times higher than what it should be, luckly I was up and watching the behavior and was quick enough to get out of the order before they filled me. I also noticed that early in the trading session the prices are higher, and if you get in too soon, you end up paying more than if you waited.

This is where my trade would have ended up Today without the orers, notice my delta would be twice higher, and I'd be down more money than I had by the end of day.

Today was an ev

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