4 ms·

There are plenty of times when someone puts in an order with every intent to enter the position (i.e. - not to spoof) where something makes them change their mi

by abduhl 6y ago

There are plenty of times when someone puts in an order with every intent to enter the position (i.e. - not to spoof) where something makes them change their mind and kill their order. Why would we punish the sincere actor who changes their mind rather than go directly after the fraudster? "Better to let 10 guilty go free" and all.

lostmsu 6y ago
Why is it punishing? It is just a rule, and you'd know in advance you have to abide by it when placing your order. If you think it is risky, do not place your order in the first place.
- Traster 6y ago
  It reduces liquidity in the market. If I can enter an order in a market and cancel it when I want then I can enter it at my fair value. If I know that once I enter the order I must wait 5 minutes before cancelling then I need to consider how far the market can move against me in those 5 minutes and adjust my price to account for that risk. So I would have to put in an order for a considerably worse price. This means that anyone who wants to trade against me has to pay the premium. I would also likely put in a smaller order to limit my risk exposure. This results in a wider market that is less liquid, meaning the people who want to trade in this market will be paying a higher premium for their trades.
  - lostmsu 6y ago
    > how far the market can move against me in those 5 minutes and adjust my price to account for that risk. So I would have to put in an order for a considerably worse price I lost you here probably due to my unfamiliarity with some financial instruments. I am only aware of two types of an order: market and limit. The first one is unaffected for obvious reason. In case of a limit order, let's say you are trying to sell. You think fair price is X, while currently market only offers (X-a). So you put limit sell order at X. What do you mean in this situation by "market moves against me"? The price goes further down? If that is the correct interpretation, when putting your order you actually have to reduce the limit price in order to increase the chances of your order to succeed, thereby increasing liquidity.

by abduhl 6y ago

lostmsu 6y ago

Why is it punishing? It is just a rule, and you'd know in advance you have to abide by it when placing your order. If you think it is risky, do not place your order in the first place.

Traster 6y ago
It reduces liquidity in the market. If I can enter an order in a market and cancel it when I want then I can enter it at my fair value. If I know that once I enter the order I must wait 5 minutes before cancelling then I need to consider how far the market can move against me in those 5 minutes and adjust my price to account for that risk. So I would have to put in an order for a considerably worse price. This means that anyone who wants to trade against me has to pay the premium. I would also likely put in a smaller order to limit my risk exposure. This results in a wider market that is less liquid, meaning the people who want to trade in this market will be paying a higher premium for their trades.
- lostmsu 6y ago
  > how far the market can move against me in those 5 minutes and adjust my price to account for that risk. So I would have to put in an order for a considerably worse price I lost you here probably due to my unfamiliarity with some financial instruments. I am only aware of two types of an order: market and limit. The first one is unaffected for obvious reason. In case of a limit order, let's say you are trying to sell. You think fair price is X, while currently market only offers (X-a). So you put limit sell order at X. What do you mean in this situation by "market moves against me"? The price goes further down? If that is the correct interpretation, when putting your order you actually have to reduce the limit price in order to increase the chances of your order to succeed, thereby increasing liquidity.