|Using The Right Broker Software
Internet Loss Protection - Put Your Contingency Orders on the Cloud!
Many traders do not realize that advanced order management, like Trailing Stops and OCO (Order Cancels Order) Bracket orders, are functions typically done by the trading software on their computer, which means if they lose internet connection or their computer crashes the stop will not trail or OCO order will not function, leaving you exposed. But, with our ApexTrader platform, this is not the case! These advanced orders are held on our "cloud" at the servers near the exchange's, giving you Internet Loss Protection should you lose your connection or have your computer crash.
Here is how the process works with other trading platforms: You enter the market and have a simple OCO Bracket placed which enters one target (Limit) and one stop loss (Stop) order around or "bracketing" your position. The Stop and Limit orders are working at the exchange, but the exchange does not know they are connected to each other with an OCO, they do not accept this function and therefore will not cancel one for you when the other gets filled. The exchange treats them as two separate orders, which means a cancellation of one of the orders needs to be sent to the exchange once one of the orders is filled. So, once the market hits either one of these orders your computer will receive a fill causing it to then send a cancellation of the remaining order to the exchange. If you lose internet connection while in your position your computer will not be able to receive the fill and thus cannot send out the cancellation of the remaining order. This remaining order will continue to be working, which means if the market then turns around it can fill this hanging order and put you into a position you do not want, thus exposing you to potential loses.
But, this is how ApexTrader works: The Stop and Limit orders of your OCO Bracket are still sent to the exchange and resting on their servers waiting to be filled, but once one of the orders is filled, in addition to the confirmation being sent to your computer, this fill confirmation is received by our servers which then can send the cancellation of the other order to the exchange. This means that even if your computer is not online the cancellation will still happen and you will not have an order hanging out there that you do not want working. This is a great feature of ApexTrader and one of the advantages it has over other trading platforms.
This also works to your advantage when the OCO Bracket order needs to be placed. Let's say you place a resting limit order to enter the market and instruct ApexTrader to place an OCO Bracket order after this limit order is filled. Should you lose internet connection while your order is filled the Stop and Limit orders of the OCO Bracket will still be placed with the exchange and as explained in the paragraph above once one of the Bracket orders is filled the other will be cancelled even if you have still not regained your internet access. With other trading platforms your OCO Bracket order will not go in at all if you lose connection and your position in the market will be left unprotected, exposing you to greater loses.
Another advantage is the speed in which the initial OCO order is placed and the speed at which the cancellation of the remaining order is done. Obviously, this is done more quickly if our servers near the exchange are doing the order placement and cancellation compared to your computer waiting to get the fill and then sending the order to the exchange via the internet. This may only be a half a second or so, but under volatile market conditions this can make a significant difference.
Day Trading Futures
We hear the term daytrading get thrown around very loosely and it has come to mean the entering and exiting of the same trade in a short period of time or at least within the same day. In the stock market they are legally referred to as Pattern Daytraders and need a minimum account size of $25,000, but futures daytraders do not fall under this regulation and can open an account with as little as $3,000 or less depending upon the broker. Also, in the news it is frequently used in reference to stock trading where its definition may not be as important, but when we talk about a daytrade in futures trading it is a very specific term and has significant ramifications on your allowed margins and therefore the number of contracts you can trade. Margin is the minimum amount of money you need to have in your account to be able to enter a position. At this point it is enough to say that margins on positions held overnight or past the market close generally have much higher requirements than trades just done as a daytrade, so it is important to understand exactly what qualifies as a daytrade. In order for a futures trade to qualify as a daytrade you must exit it before the market closes.
Although overnight margins are set in stone by the exchanges, daytrade margins can be set by your brokerage firm, which means Oil Futures daytrade margin will vary from broker-to-broker.
Currently with ApexFutures the daytrade margin for Oil is $1,000.
With the ApexTrader trading platform you can trade with reduced daytrade margins anytime the market is open as long as you get flat (out of your position) by the next market close.
Lower margins are not the only advantage to daytrading, most people would agree that doing a daytrade has many advantages over doing a position trade. The reasons are you may not be exposing yourself to possible violent moves overnight, gap openings and poor fills during less liquid times and will probably sleep better at night knowing that you do not have an open position. So, this is another good reason to not take a position “home with you.”
One warning I need to give you in regards to using lower margins and then trading more contracts is that obviously the more leverage you are using (the more contracts you trade per amount in your account) the wilder the swings in your account balance, this is a good thing when you are trading well, but a very bad thing when your are not. So, remember you do not have to trade the maximum allowable contracts that your daytrade margins allow, you should just trade what you are comfortable with and what makes good money management sense.
Order Types & How To Use Them
Market - This is the most basic and frequently used order type which tells the exchange's computers to execute your order at the next available price. So, if you are buying your fill price will be the next available offer and if you are selling your fill will be the next available bid, therefore this does not mean you will necessarily receive the "last price" or last quote you saw. Many new traders will look at the market and might see a price of 995.50 as the last quote or trade and then they place a market order to buy which is filled at 995.75 and they wonder why they did not receive a price of 995.50. The reason is the last price of 995.50 is just that, the last price and not necessarily the next price. To get a better indication of where you might be filled you need to look past the last price and at the current bid/offer, which in our example may have been 995.50 bid at 995.75 offer. This means anyone who is buying at the market can buy at 995.75 and any sellers at the market will be filled at 995.50. This difference between the bid and offer is known as the spread and is typically one tick in a liquid market like the Emini S&P. Now, of course there is still a chance you may not receive the bid or offer price as your fill because the market can still move in the milliseconds between the time you click and the time your order reaches the exchanges computers, but this can work against you as well as for you. The advantage to using a market order is that you can always expect to get a fill (assuming there are buyers or sellers available) in the quickest way possible. The disadvantage to market orders is that in a volatile or fast moving market you may not get the last quoted bid or offer, but if things are moving fast you may not be able to afford to wait or work a limit order. Click here to watch a video on how to place a Market order on the ApexTrader trading platform.
Limit - This is an order to buy or sell at a designated price, a limit to buy is placed below the current market price, while a limit to sell is placed above the current market price. If the last price is 995.50 and you only want to buy if the market goes down to 993.50, you can place a Buy Limit order at a price of 993.50. Since all orders are filled on a first in, first out basis (FIFO), this order will be placed in the queue on the exchange's computers. In other words if you look at the level II quotes on your Depth of Market (DOM) you will know ahead of time the number of contracts that are in front of you and therefore need to get filled before you will receive a fill. For example, if you look at the DOM and at 993.50 it says there are 2,100 contracts already trying to buy, then your order to buy will be the 2,101st contract to be filled (assuming none of the existing orders to buy are cancelled). Keeping this in mind don't expect to receive a fill just because the market falls down to 993.50 and trades there once and then pops back up. You will most likely need to see the market trade there several times, or enough times for there to be 2,101 contracts traded. Of course the same procedure holds true for Sell Limit orders but they would be placed above the current market price. Click here to watch a video on how to place a Limit order.
Stop - These are most commonly used to stop the loss on a position, which is where it obviously got its name from, but these orders can also be used to enter the market. A stop order to buy is placed above the current market price and a stop order to sell is placed below the current market price. Stop orders are price orders that turn into market orders once the designated price trades. Let's say the last trade is at 995.50 and you want to sell if the market falls to 993.50, you would place an order to Sell at 993.50 on a Stop. If and when the market falls to 993.50 your Stop order will turn into a Market order to sell at the next available price. Once triggered, the order competes with other incoming Market orders therefore Stop orders do not guarantee you an execution at your Stop price, but in a liquid market under normal conditions you should expect to receive your Stop price of 993.50. But, let's say a news report was just released and the market really falls fast on high volume, then you may receive a fill price lower than your intended price and this is called slippage. Click here to watch a video on how to place a Stop order.
Bracket OCO - A bracket order is actually two separate orders that are placed around or "bracketing" a position, one of the orders is your Limit order to take a profit and the other is your Stop order to get out at a loss. This type of order forces you to have a predetermined profit target and stop loss point and even though the stop price is not guaranteed, this is a much more reliable way to admit you are wrong and take a loss since this order is working at the exchange and not dependent on you to pull the trigger to get out since many new traders act like a deer in headlights when they rely on themselves to manually exit a losing trade. The other benefit of this strategy is that once the profit or loss order is hit, the trading platform will cancel the remaining order for you, this is the OCO part, or Order Cancels Order function. Let's say you buy a contract at the Market and get filled at 995.50, and want to either get out with a 2.00 stop or 3.00 profit; the trading platform can automatically place a bracket order with a Sell Stop at 993.50 and a Sell Limit (target price) of 998.50. If the market hits your Limit price of 998.50 and fills you, the platform will then automatically cancel your Stop order at 993.50. Important: ApexTrader allows you set these levels before you enter the initial position and you will see these orders on your Active Orders screen with a State of "Held," these bracket orders have been received by our servers and will be placed once you enter the market. This means if you lose your internet connection or have computer issues when your Bracket needs to go in, the servers will still place and manage the orders for you. This is important because most other trading platforms rely on your computer to place these orders, which means there is more of delay when they get placed and they will not go in at all if you are having computer issues.
Trailing Stop - A trailing stop allows you to enter a Stop loss order and have it move as the market moves in your favor based on your preset parameters. This allows you to lock in a potential profit if the market moves in your favor. I am sure you have seen a trade go in your favor, only to see it come back and stop you out for a loss, this type of order will hopefully prevent that from happening. Let's say you are long from 993.50 and place an initial Stop at 991.50 and then the market moves in your favor to 995.50. At this point you can have the Stop moved up to 994.50 and then continue to ratchet up until it comes back down and stops you out, but don't forget as stated above it does not guarantee you get out at your exact stop price. All of this Stop movement is done automatically by the trading platform based on predetermined parameters you setup before the trade even begins. Click here to watch a video of an example on how to setup and use this feature.
Multi Bracket - This advanced order type allows a trader who trades with multiple contracts to set up to three different targets and three different Stops which can also be set to trail, should you choose. Click here to watch a video of an example on how to setup and use this feature.
Setup Apex Trader:
Downloading and Login
Basic Order Entry
OCO Bracket Order
Trailing Stop Order
Trade From Charts