Day Trading

It all depends on the security traded. If you are trading LEH for instance (usually .01 spread), market orders are sufficient for quick entry/exits. But for something like POT (which has spreads of up to .40 at times), limits are a much better method to reduce slippage.

Most day traders that I know always limit however. But they "limit through". Limiting through means they are limiting through the market, which will usually give them the same result as a market order, but helps in one particular area: "the bad print". Sometimes if you go market, you may receive a bit out of the spread, especially if you route through ECNs (and even NYSE at times). But if you limit through, you might catch an ECN for a good fill (sometimes better than the best bid/offer). By limiting through, you also limit the price at which you want (so don't overpay and such).

Also, if you don't know what limiting through is…..if the market is say 29.10 x 29.12 …and you want to buy….you limit buy at something like 29.15. This way, the worst fill you could receive is 29.15. I've seen some terrible prints before, so I definitely suggest doing this.

Thin issues are most prone for the bad print, but even thick issues are a problem at times. With LEH yesterday, I see a print of 13.98 when the market was 13.84 x 13.85 (because of a bad market print). With POT a few days ago, I say a print of 219.55 when the market was 218.95 x 219.10.