I've been trading for more than 15 years and have paid a few dues over that time. Every once in a while, though, I get another tuition bill for my continuing-ed. Over the years I have moved away from using orders...at all (except for limit to get in and out). Generally non-limit-orders do not favor retail investors and can be gamed by those insidious forces on the other side. Retail investors have advantages that institutions don't such as small scale for taking relatively illiquid and high spread instruments, no institutional pressure to be "in" all the time, no strict long side bias, no perverting compensation incentives, etc etc. Another big one is that retail investors can be patient and can usually wait and see. 9 times out of 10, except for issues related the efficiency of labor and attention, orders (except for taking oneself in with a limit) are not necessary. Since I have a systematic approach where attention and labor are, on the margin, important, I sometimes execute automated trades structured with layered orders. For those times that I do use orders they are usually simple stop limits which are also sometimes set up in conjunction with time parameters. I have gotten lazy though. For certain trend-following trades I sometimes structure a negative scalp where I get out on a trend signal and then get back in systematically if the counter-trend move fails but with a small real-dollar loss and a tax-inefficient hit more often than not. It's right there that I got weak and lazy. I was stop-limiting out on the sell (when long) and stopping in on the buy. I knew that was wicked because stop orders become market orders and market orders can be murderous. And so it happened to pass...
Look at a chart of PCEF, a composite CEF income ETF (ignore the question of why that etf) for March 10. See that giant spike up in price? Ever wonder sometimes who buys at the top of those chart bars? Well....that would be me. Here's how it goes down. I stop-limit out yesterday. Then on the market open today I had a standing stop-buy that was open (bad me). What happened? The stop on the signal price became a market order when the market opened and I got taken for a ride by a dark pool where the order got filled at 23.499 where my buy-stop was at 22.77. It was 300 shares so it was only a "take" of about $220 which is not the end of the world but I consider that $220 part of my kids real school tuition, not my pseudo market tuition, and a type of theft though it was really only my stupidity. That dark pool is now in my crosshairs though I doubt there is much impact I could ever have on them. But maybe the day will come and my memory is long in these few years before the dementia starts to kick in...
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