Understanding Pricing Types in TradersPost: A Guide for Traders
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TradersPost’s pricing types—last, bid, ask, and mark—each suit different trading conditions. This guide explains when to use each for optimal trade accuracy.
When executing trades with TradersPost, choosing the right pricing type is crucial for optimizing your strategy, particularly when setting take-profit or stop-loss orders. This guide will explain the various pricing types available, their uses, and scenarios for selecting each type to improve trade accuracy.
Available Pricing Types in TradersPost
TradersPost offers several pricing types for calculating entry and exit points:
1. Last Price: This is the most recent transaction price.
2. Bid Price: The highest price buyers are willing to pay.
3. Ask Price: The lowest price sellers are willing to accept.
4. Mark Price: Often an average of the bid and ask prices, used as a midpoint reference.
Each of these pricing types can affect your trading outcomes differently, especially in volatile markets or when spreads are wide.
Choosing the Right Pricing Type
While TradersPost defaults to the mark price, some traders may benefit from adjusting this based on their trading strategy. Here’s when each pricing type might be advantageous:
• Last Price: Recommended for volatile markets where the most recent transaction is a better reflection of the current market sentiment.
• Bid or Ask Price: This choice can be ideal for traders focused on tight take-profit and stop-loss thresholds, as it more accurately reflects the immediate buy or sell potential.
• Mark Price: Works well in stable markets but may be less accurate when the bid-ask spread is wide.
Practical Example: Using Bid and Ask Prices for Market Orders
For market orders where take-profit and stop-loss are calculated dynamically (e.g., set as a percentage relative to entry), the bid or ask price can be particularly beneficial. If you use the mark price on a stock with a wide bid-ask spread, there’s a risk that your take-profit or stop-loss might be set at an inaccurate level, potentially impacting the trade outcome. Selecting bid for sell orders and ask for buy orders aligns the strategy more closely with actual trading conditions.
Future Enhancements for Dynamic Price Adjustments
TradersPost is exploring a potential update to refine take-profit and stop-loss calculations. This feature would temporarily use a quote price for setting initial limits and then adjust these values based on the exact fill price after order execution. This enhancement would allow take-profit and stop-loss levels to align more accurately with real entry prices, potentially reducing discrepancies and slippage.
Conclusion
Selecting the optimal pricing type can make a significant difference in trade execution, particularly in markets with high volatility or wide bid-ask spreads. By understanding each pricing type’s purpose and best uses, TradersPost users can better align their strategies with actual market conditions.