Limit orders into news: the quiet advantage
Posted: Sat Oct 31, 2026 9:53 pm
Market orders during news suffer from slippage. Limit orders, which fill only at a specified price or better, have the opposite behavior. When price spikes through the limit, the fill can occur at the limit price or at a better one.
A buy limit placed below the market before a release gets triggered when price drops. In a fast move, it may fill at the limit, or at a price better than the limit if the market gaps through.
The catch is that limit orders don't fill if the market doesn't reach the level. Missing the trade is the cost. A stop-loss attached to the limit order is subject to the usual slippage, though.
The risk is a real trend day. The limits fill, and price keeps going. A stop is needed, and the stop slips.
The idea works better in theory than in practice, but it's one of the few approaches in which slippage can be favorable.
Does fading the first spike with resting limits really produce positive slippage, or only in theory?
A buy limit placed below the market before a release gets triggered when price drops. In a fast move, it may fill at the limit, or at a price better than the limit if the market gaps through.
The catch is that limit orders don't fill if the market doesn't reach the level. Missing the trade is the cost. A stop-loss attached to the limit order is subject to the usual slippage, though.
The risk is a real trend day. The limits fill, and price keeps going. A stop is needed, and the stop slips.
The idea works better in theory than in practice, but it's one of the few approaches in which slippage can be favorable.
Does fading the first spike with resting limits really produce positive slippage, or only in theory?