I would like to hear TJ traders' thoughts on this, especially Option traders.
A Market SL makes sense to me since even though it gets filled at a less advantageous price, it still gets filled no matter what. ie, it is guaranteed to stop the loss, as per the definition itself!
A Limit SL, realistically speaking will trigger 90% of the time. And it will always fill at a better price than a Market order. But it's that 10% of the time that's worrying. When the market crashes and you absolutely have to get out, the limit order never gets filled and you get taken along for the ride. ie it lets you down when you need it the most.
Personally, I'm comfortable using market SL orders in the Futures segment since the peace of mind I get is worth the slightly larger loss I have to take.
However, India's low volume Options market are a whole different ballgame. Here a Market order is going to have a crazy amount of slippage, maybe to the point where the slippage loss sustained over the 90% of "safe" SLs would equal/exceed the loss limit orders will suffer during the 10% of market crash SLs.
Would any experienced Option trader like to comment on this? Thanks.
A Market SL makes sense to me since even though it gets filled at a less advantageous price, it still gets filled no matter what. ie, it is guaranteed to stop the loss, as per the definition itself!
A Limit SL, realistically speaking will trigger 90% of the time. And it will always fill at a better price than a Market order. But it's that 10% of the time that's worrying. When the market crashes and you absolutely have to get out, the limit order never gets filled and you get taken along for the ride. ie it lets you down when you need it the most.
Personally, I'm comfortable using market SL orders in the Futures segment since the peace of mind I get is worth the slightly larger loss I have to take.
However, India's low volume Options market are a whole different ballgame. Here a Market order is going to have a crazy amount of slippage, maybe to the point where the slippage loss sustained over the 90% of "safe" SLs would equal/exceed the loss limit orders will suffer during the 10% of market crash SLs.
Would any experienced Option trader like to comment on this? Thanks.