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Market-If-Touched (MIT) Orders

An MIT order to buy is always placed below the market, and an MIT order to sell is placed above the market. An MIT order becomes a market order when hit. Therefore, if you have an MIT order to buy at 4150, this order will become a market order as soon as a trade occurs at 4150. The pit broker holding this order will immediately buy at the market. You could get filled at any price; however, you will usually be filled at or near your order, at times better than your price and at times worse. This is the chance you take when using such an order. An MIT order is used when you have a specific price level in mind for entry and you do not wish to take the chance of not being filled. Ordinarily such orders are used for selling at resistance above the market or for buying at support below the market.

The day trader who is using the support and resistance methods described in this book may use MIT orders; however, do note that i such orders can cost you a few ticks. MITs are, however, excellent

orders to use when trading support and resistance levels. Remember that such orders are not accepted by all exchanges nor are they accepted at all times. Under certain market conditions MIT orders may be refused at the discretion either of the pit broker or of the exchange.

Fill-or-Kill (FOK) Orders

A fill-or-kill order is given at a specific price with the understanding that the pit broker will attempt to fill your order three times in succession at the requested price. Hence, if you have an FOK order to sell at 4550, the broker who gets your order will offer at 4550 three times. If there is no fill, the broker will immediately cancel, or "kill," your order, and the kill will be reported back to you. The advantage of this order is that you will be able to place it at a specific price, and you will get very quick feedback as to whether it has been filled. And that's important!

Be aware, however, that not all exchanges or brokers accept FOK orders. Under certain market conditions such orders may be refused. Some brokers will become irritated if you use too many FOK orders that go unfilled, since it takes time and person power to place these orders. Discount brokers may be especially unhappy if you use too many FOK orders.

Finally, do not place your orders too far from the market, or they will not get filled. This will be even more aggravating for your broker. If you plan to use FOK orders, then please use orders that are very close to the current price. If you abuse these orders, you will frustrate your broker and you will lose the respect of the order takers.

FOK orders are useful in virtually all situations where entry at the market should be avoided but where there is a need to establish or liquidate a position. Remember that using an FOK order does not guarantee a price fill; it merely guarantees that you will be filled at your price or better or not at all.