How To Place Your Orders At The Trade Desk.
The trade desk phone number is 1 (800) 676-1562
"I have a futures order. This is John Smith, my account
number is 12345. Buy 3 May Corn, 240 stop."
The above message conveys all the essential parts of a futures order.
If at first it looks a little foreign to you, don’t worry, you’re
not alone.
There are sound, practical reasons for presenting your orders in
a particular way. First, this process is the best one we know of
in terms of preventing errors on the parts of both the customer
and the order specialist.
Second, with a solid understanding of order types and how to place
them, you can increase your ability to act and react in varying
market conditions.
We’ll go step-by-step through the elements of order placement:
Specify the type of order
The first thing the order specialist will need to know is the type
of order you will be placing. Specify if it is a futures or options
order.
Since we will automatically place your order as a day order, you
will need to tell us at this time if you’ll be placing a GTC (Good
‘Til Cancelled) order.
Day Orders: Day orders are good until the end of the current trading
session. If, after the floor broker receives your instructions,
your order is unable to be filled, it is cancelled immediately after
the market closes. It will not be resubmitted to the filling broker
for any subsequent trading sessions.
Good ‘Til Cancelled (GTC) Orders: GTC orders will remain in effect
until: 1) you cancel the order; 2) the order is filled; or 3) the
contract expires.
2) Identify yourself
We need to know your name and account number.
3) Indicate if you are buying or selling.
4) Quantity
How many contracts will you be trading on this order? Always express
quantity in terms of the number of contracts you want traded.
5) Month, and if necessary, Year
Always indicate the delivery month you will be trading. Specify
the year if you will be trading a contract that is not deliverable
until the next calendar year or beyond.
6) Commodity, and if necessary, the exchange
Many commodities have contracts traded at two or more exchanges.
If you will not be trading on the primary exchange, please let us
know at which exchange you want it traded.
7) State your price
If not a market order, let us know at which price you wish your
order to be triggered.
8) Type of order
At this point, we need to know exactly what type of order you’ll
be placing - a market order, limit order, a stop, MIT, etc. It’s
very important that you state the order type at the end of your
order. A table of the acceptable order types for various markets
is included at the end of this guide.
Repeating back an order:
Your order specialist will repeat your order back to you. Listen
carefully to the order when it is repeated back to you; the order
will be placed exactly as it is repeated to you. This is the time
to make any corrections and if necessary, ask your order specialist
to repeat the order back to you a second or third time.
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Order Types
1) Market order
Use this type of order when you want to make your trade at the
best available price upon receipt by the floor broker. Do not
specify a price; rather, say "at the market". To place such an
order, a trader might say: "I have a futures order. This is John
Smith, account #12345. Buy 3 May Corn at the Market."
2) Limit order
Use this type of order when you want to be filled only at a specified
price or better. A limit buy order is placed at or below the current
market price, while a limit sell order is placed at or above the
current price. Within certain caveats, you are guaranteed a fill
if the market trades through your price. If the market merely
trades at your price, you are not guaranteed a fill.
Occasionally, a customer will place a limit order when the market
is currently trading at or through their limit price. This type
of order is called an "Or Better" order because the designated
price will be flagged with an "OB" to signal the floor broker
that your order, which might look suspiciously like a stop, is
in fact, a limit order. Chances are, your order specialist will
want to confirm the same thing with you. Place this order exactly
as you would any limit order adding "or better" after the price.
3) Market if Touched (MIT) order
Use this order to make sure you get filled if the market hits
your price. It becomes a market order when the market hits your
specified price. As with all markets orders, you will be filled
at the best prevailing price when your MIT is elected; thus, you
will be filled, although not necessarily at your stipulated price.
For example, if May Corn was trading at 230, John Smith would
say: "I have a futures order. This is John Smith, account
#12345.
Sell 3 May Corn at 232 MIT."
4) Stop order
Stop orders can be used for three purposes:
a. to minimize a loss on a long or short position,
b. to protect a profit on an existing long or short position,
or
c. to initiate a new long or short position.
A buy stop order is placed above the market and a sell stop order
is placed below the market. Once the stop price is touched, the
order is treated like a market order and will be filled at the
best possible price.
An order which becomes a market order when trading occurs at
or through your specified price. An acceptable buy stop is placed
above the current price and is elected when the market trades
or is bid at or above your stop price. A sell stop is appropriately
placed below the current market and becomes a market order when
the market trades or is offered at or below your price.
The stop order is often referred to as a "stop loss" referring
to an acknowledgement that you are wrong on the market direction
and want to get out of the market before it moves any further
against you. While this analogy can help you remember to place
buy stops above and sell stops below the current price, the term
"stop loss" is actually something of a misnomer.
Although stops have been used to exit a position when it has reached
a certain point against you, the stop is also commonly used to
protect profits or even enter new positions. With the May Corn
at 230, John Smith may place a stop order like this: "I have a
futures order. This is John Smith, account #12345. Sell 3
May Corn at 224 ½ stop."
5) Stop Close Only order
Use this order when you want your stop to be filled only if elected
in the closing range. Since this order can only be filled during
the closing range, the price you stipulate may be anywhere in
relation to the current market. It is similar to a stop order
with the only difference being that it must be elected and filled
during the closing range (usually the last 30-60 seconds trading).
6) Stop with Limit order (Stop Limit)
Use this order when you want to give the floor broker a limit
as to how far through your stop he may fill your order. When you
place this order, two prices must be stipulated: the stop price
and the limit price. When your stop is elected, the broker will
fill your order if it is possible to do so without exceeding your
limit price. If the broker is unable to do so, the limit portion
of your order goes into effect. Now, the market must turn around
and surpass your limit price in order to be filled, just like
a regular limit order. For example: "I have a futures order. This
is John Smith, account #123-12345. Buy 5 June Canadian Dollar
at 7250 stop, 7260 limit."
7) Market On Close order ( MOC )
Use this order if you want to be filled at the market at any
time during the close range (usually the last 30-60 seconds of
trading). To place this type of order, just say "MOC" or "Market
On Close" instead of a price.
8) Fill or Kill Order
This order instructs the floor broker to immediately execute
your order at a specified price or to cancel it if unable to do
so. The price should be near enough to the current market price
so as to make immediate execution a realistic possibility. When
the floor broker receives your order, he will immediately bid
(if you are buying) or offer (if you are selling) your price at
least three times.
If a trade occurs, you will be notified right away of your fill.
If no trade occurs, the order is cancelled (killed) on the spot
and the broker's obligation to that order ends. To place such
an order when the market is trading at 7210, you would instruct
the order specialist to "Sell 5 June Canadian Dollar at 7210 Fill
or Kill".
9) Order Cancels Order ( OCO )
This order actually gives two alternative instructions in which
the execution of either one automatically cancels the other. Buy
and/or sell instructions cannot be combined. For example, suppose
you are long three June Canadian Dollar at 7200. You want to get
out of the market if it declines to 7145, but what you'd really
like is to take profits at 7240.
Therefore, you might place your order to "Sell 3 June Canadian
Dollar at 7240 OCO 7145 stop". The broker will fill whichever
portion of your order he is able to first, simultaneously canceling
the other portion. Thus, if the market rises and the 7240 limit
portion of your order is filled first, the stop is automatically
cancelled. If your stop is elected before your limit can be executed,
the broker will fill your stop and cancel your limit.
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Placing an Options Order
You'll follow essentially the same procedure when you're placing
an options order – but you'll include some additional information
that's specific to options.
"I have an options order. This is John Smith, account #12345.
Buy 8 December Gold 320 calls at 1.20 to open a position."
Here's the information to include on an options order:
1) Identify that it is an options order; specify if it is a GTC
order
2) Identify yourself: your name and account number
3) Indicate if you are buying or selling
4) Quantity
5) Month, and if necessary, the Year
6) Strike Price
7) Commodity, and if necessary, the exchange
8) Call or Put
9) Price
10) Indicate if you are opening the position (it is a new position)
or if you are closing (off setting) an existing position
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Spread Orders
A Spread order is the simultaneous purchase and sale of the same
or related commodities.
Premium – The difference of prices in points between the months
or commodities being spread (this excludes special ratio spreads)
EXAMPLE:
July Corn 245 ½
December Corn 235
Premium equals = 10 ½ (the premium or difference is 245
1/2 minus 235)
The premium almost always goes on the side of the higher priced
month or commodity of the spread.
For example, if you wish to buy the July Corn and Sell the December
Corn contract and want to do the spread with the difference between
the months of no more than 10 ½, you would place the order as
follows: "I have a futures spread order. This is John Smith, account
#123-12345, buy 5 July Corn and sell 5 December Corn at a premium
of 10 ½ on the buy side." Of course, you could also do the spread
at the market: "Buy 5 July Corn and Sell 5 December Corn at the
market."
Remember: Most spread brokers will not accept stops on spreads.
Also, spread markets are traded separately from the regular markets.
Floor spread brokers bid and offer the spread premiums, which
in some cases vary widely from the difference between the last
quotes in the individual markets. It is wise to ask for the bid/ask
on spreads, especially in less liquid markets.
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Cancel a Working Order
You may cancel any order which has not yet been filled, in other
words you may for some reason want to cancel a working order.
There are two methods in which to cancel an order. The method you
select will vary depending on whether you want to cancel it outright
or merely change it.
Straight Cancel: If you have a working order and don't want it anymore,
you would choose this method. You are telling the floor broker not
to work the order anymore – you do not want it filled.
If your order has not been filled by the time your straight cancel
request gets to the pit, the broker will pull the order from his
deck and return it as cancelled. If your instruction to straight
cancel reaches the floor broker after the order has already been
filled, it will be returned as "Too Late To Cancel" (TLTC) and you
will be notified of your fill.
To place a straight cancel, give your name and account number and
tell the order specialist that you want to straight cancel an order.
Specify if it is a day or GTC order and give the ticket number and
the market you are trading. Example: "This is John Smith, Account
#12345. Straight cancel GTC ticket #4423 in the Hogs."
Cancel Replace: Use this method if you want to change an order.
The new order must be for the same commodity and delivery month,
and the buy/sell instruction must remain the same. You can, however,
change from GTC to Day and vice-versa, as well as modify the quantity,
price, and/or type of order.
To cancel replace an order, give your name and account number and
tell the order specialist that you want to cancel replace an order.
Specify it is a day or GTC order and give the ticket number and
the market you are trading. Example: "This is John Smith, account
number #12345. Cancel Replace GTC ticket #4423 in the Hogs."
Once the order specialist has located the original order, give the
new instructions. Mr. Smith in this example would continue: "Replace
that with a GTC order to sell 4 April Hogs at 48.60".
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Avoiding Common Pitfalls
1. Be sure to specify if you want to have a GTC (Good-Til-Cancelled)
Order. If you do not specify your order as GTC, it will be placed
as a day order and canceled at the end of the trading session.
2. Be very clear when placing your orders. Our order specialists
are eager to please. If you have any questions, please do no hesitate
to ask. Listen very carefully when the order specialist repeats
your order. It is your job to correct any incorrectly repeated order;
don't be casual about it. If the order specialist does not repeat
your order, he may not have gotten it. In this case, verify that
your order was even taken.
3. Since some months sound alike over the phone, many customers
prevent errors by referring to "September Labor Day" and "December
Christmas", as in "Sell 5 December Christmas Corn at the Market."
4. If a commodity trades at two exchanges, one of which is the Mid-American
Exchange, it is usually not necessary to specify an exchange unless
you want to trade the Mid-Am. Otherwise, we will assume that you
want your order placed at the primary (larger) market.
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Exchange Information on Orders
Different Exchanges accept different orders. All of the orders which
we have discussed are not accepted by all exchanges. Following
is a list of the major commodity exchanges, their commodities and
the orders which they accept:
CHICAGO BOARD OF TRADE
(Acceptable are: Market, Market on Close, Limit, Stop, and Fill
or Kill Orders)
WHEAT CORN
OATS SOYBEANS
BEAN OIL BEAN MEAL
T-BONDS T-NOTES
MUNI BONDS FIVE YEAR NOTES
TWO YEAR NOTES DJIA Index
CHICAGO MERCANTILE EXCHANGE
(All of the orders described in this section are acceptable)
LIVE CATTLE FEEDER CATTLE
LEAN HOGS PORK BELLIES
LUMBER
INDEX AND OPTIONS MARKET (IOM)
(All of the orders described in this section are acceptable)
S&P 500
MID CAP 400
NASDAQ 100
INTERNATIONAL MONETARY MARKET (IMM)
(All of the orders described in this section are acceptable)
T-BILLS JAPANESE YEN
EURODOLLARS BRITISH POUND
CANADIAN DOLLAR SWISS FRANC
EUROCURRENCY AUSTRALIAN DOLLAR
MEXICAN PESO EUROYEN
GLOBEX
(Only Limits, Stop Limits, and Market if Touched (MIT) are acceptable)
NEW YORK COMEX
(For Copper only, Acceptable are: Market, Market on Close, Limit,
Stop and Fill or Kill. OCO Orders are acceptable only if the second
half of the order is a MOC.)
COPPER
(For Gold and Silver, Acceptable are: Market, Market on Close, Limit,
Stop, and Fill or Kill. Stop Limits are acceptable only on a not-held
basis.)
GOLD
SILVER
NY COTTON EXCHANGE
(Acceptable are: Market, Market on Close, Limit, Stop, and Fill
or Kill. OCO Orders are acceptable but only if the second part of
the order is a MOC)
COTTON
ORANGE JUICE
DOLLAR INDEX
NY COFFEE, SUGAR & COCOA EXCHANGE
(All of the orders described in this section are acceptable)
COFFEE
COCOA
SUGAR
NY MERCANTILE EXCHANGE
(All of the orders described in this section are acceptable)
LEADED GASOLINE HEATING OIL
PLATINUM CRUDE OIL
PALLADIUM NATURAL GAS
NY FUTURES EXCHANGE
(All of the orders described in this section are acceptable)
NEW YORK STOCK EXCHANGE INDEX
CRB INDEX
KANSAS CITY BOARD OF TRADE
(All of the orders described in this section are acceptable)
KANSAS CITY VALUE LINE
KANSAS CITY MINI VALUE LINE
(Acceptable are: Market, Market on Close, Limit, Stop and Fill or
Kill)
KANSAS CITY WHEAT
MINNEAPOLIS BOARD OF TRADE
(All of the orders described in this section are acceptable)
MINNEAPOLIS WHEAT
MINNEAPOLIS WHITE WHEAT
MID AMERICA EXCHANGE
(Acceptable Are: Market, Market on Close, Limit, Stop, Fill or Kill
and Stop Close Only Orders)
CATTLE HOGS
SILVER GOLD
CORN BEANS
WHEAT T-BILLS
T-BONDS SWISS FRANC
CANADIAN DOLLAR EUROCURRENCY
JAPANESE YEN BRITISH POUND
SUGAR
***PLEASE NOTE THAT THE INDIVIDUAL EXCHANGES MAY CHANGE THE ORDERS
WHICH THEY ACCEPT WITHOUT PRIOR NOTICE.
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| The information contained herein is believed to
be reliable, FarrDirect is not held responsible as to its
accuracy or completeness. The information contained herein is
subject to change without notice. Those using the information
herein for trading purposes are responsible for their own actions
and no claim is made that the recommendations will be profitable
or that they will not result in losses. |
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