I noticed that Interactive Brokers have two types of orders that seem to be the same, namely stop orders and market-if-touched orders.
Found a good blog entry (link here) that highlighted the difference. Basically two scenarios
- If you are looking to buy
- If trigger price > current price, use a stop order
- If trigger price < current price, use a market-if-touched order
- If you are looking to sell
- If trigger price > current price, use a market-if-touched order
- If trigger price < current price, use a stop order
The same rules above apply for stop limit orders versus limit-if-touched orders.
The idea is that stop orders are typically used to close out positions. Hence if you have a long position, you have a stop sell order when the price goes down, and if you have a short position, you have a stop buy order when the price goes up.
Whereas if-touched orders are used to enter into new positions. Hence if you want to enter a long position at a particular support level, you would put your trigger price near the support level which is below the current market price. Similarly if you want to enter a short position a resistance level, you would put your trigger price near the resistance level which is above the current market price.
For information on more order types, see the following links
- http://www.interactivebrokers.com/en/software/tws/twsguide.htm (look under Order Types on the left panel)