I watched the stop trigger video and confused about the market offset. Can someone please explain to me the use of the market offset? Say you are going long and have an offset of 10 like darrell says he does. If the price is 70 when the trigger is hit why would you ever want to get in at 80 when you could have got in for 70? Or even if you had an offset of 2 and the price was 60, you’re getting in at 62. I know the difference is small but the offset is still eating into your potential profits. Darrell says the reasoning behind offset has something to do with getting filled or something like that and I kept rewinding part of the video trying to understand but I’m still stuck. Can anyone clarify? and also explain the thought process when choosing an offset? thanks.
market offset
Good question. The reason for the offset is to help assure that your order gets filled. It does not always mean that you will get filled for the offset price. If you are wanting to get in at $60, and use use an offset of $70 for example…IF it can fill you at $60 it will! So lets say the market is moving up slowly and it gets to $60 and you get filled, then great! But lets say the market is moving up , it gets to $55, then BOOM, there is a Spike in the market and it jumps to $63 out of nowhere. That means it flew through your $60 limit order and you did not get filled. So it would have kept you out of the trade completely in that example. But it turns out it was a good trade and you totally missed out. BUT, if you had an offset in there you could have still got filled. So it means get me in at $60 if you can, but worst case I will pay up to $70 for it. So you could get filled at $60, or anywhere between $60-$70. Most times you can get your desired fill, but at times if there is movement, it could move fast, and this way you can still get in the trade, yes, possibly at a little more, but at least you did not mis t completely. So it is sort of like saying this " I WANT to pay only $60, but Im WILLING t pay at max of $70 to get in the trade, and if you can’t get me in there, just keep me out of it"…does that help clarify?
Sort of. It seems like it is serving the same function as the worst limit. If I want to get in a 60 and and have an offset of 10 then the max I would be getting in at is 70. Or I could have the offset at 0 and have the worst limit as 70 I’d still be getting in at a max of 70. Another thing is if had an offset of 5 but a worst limit of 70 wouldn’t that make one or the other useless? For example Im getting in at a max of 65 but also the worst I will take is 70. It’s either the max is 65 or it is 70, right?