Premarket and stop order trading

Nowadays the premarket trading becomes very popular among many traders, because many moves start and sometimes end even before the regular trading session opening on the NYSE. First of all it refers to stocks in play. Irregular session has some features:

• Low liquidity;

• Large spreads;

• Potential risk of the news and as a result, there is a possibility of a strong movement against the open position;

• Limit orders only.

Perhaps the point 4 is the greatest inconvenience. The work only with limit orders does not allow putting a stop (which is logical) and quickly close the position with market order upon reaching a certain level. It is ok when one-two positions are trading, but when it is more then 3-4 positions, it becomes a problem. Fortunately, there is a decision in the Takion terminal. This platform enables conditional trigger orders. In simple terms, the trigger is an action of the terminal when a certain event appears. In premarket trading such event is a print, which is below a predetermined level. So what we want to get is automatic closing of a position after the print becomes below/above a predetermined level. Implementation: create a trigger with print condition that will be sending a limit order to the position closing at the opposite quote (for Long – buy at bid, for Short – sell at offer).

Algorithm of a trigger order creating for the premarket trading

1. First of all, create an order, with which we are going to close a position. In “Side” set “Close” (it will enable the creation of one order for Long and Short; Takion will automatically detect the right direction). In “Price Offset” set “Opposite Side” – the limit order will work at the opposite quote, that is exactly what we need. In position size we add “ClosePos 1” – it will completely close the current position. Although it is possible to be more flexible and set “tier” just like for the normal orders, but then you have to be more careful with sending. In TIF it is necessary to set “Day”, Destination – “ARCA” (no EDGA, BATS, etc.).

premarket trading Takion

Limit order

2. Now we should create a trigger itself that will enable sending the limit. Side – no difference (it only affects on display in the Orders; it anyway will be working in the direction, in which there will be closed positions). Command to Execute – here we choose our limit order, which we created. It is also necessary to put a check for “adjustable”. Dash – print (triggering by the print; e.g. you can set Bid)



3. Assigning a hotkey through commands.

How it works. First of all, open the position, then press the hotkey. Depending on what you specified in “side” of a trigger, there will appear either green or red window. There must be written that it is TRGR. Then it is very simple: set a “Stop price” with arrows, and click Enter. Open Order with Stop Price, which is specified in the trigger, will appear in “Orders”. Don’t pay attention to the “size” and “side”.

That’s how you can trade premarket using synthetic stop orders in the Takion terminal. This is not the only function they provide. If there is a need, there will always be a tool.

Have a good trade!