"Loop order"

[nico3725]

Hello,

Has anybody the exact and complete definition of a "Loop order".


Many thanks for your help.

[nico3725]

Loop Order

A Loop Order is a perpetual or repeating order placed in anticipation of a cyclical movement in the market. It is a pair of matching orders where the first leg is active and the second dormant. When the desired price is reached for the active order, it is executed, the dormant order becomes active, and a new order (a copy of the one just executed) is created in a dormant state. This process repeats until the order is explicitly cancelled.

Normally both legs of a Loop Order are Limit orders and they always are for the same amount.

For example, if a trader expects the rate of an instrument to fluctuate between two levels (range trading), a Loop Order placed just inside the limits of the fluctuations will produce repeated good results.

[Rachamim]

Nicholas,

This is an interesting concept. It occurred to me some time back, although I have not so far had chance to test it out, that for a pair such as EUR/CHF, which travels in a fairly straight line, the sort of system you mention (if I understand it correctly) could be used.

There is a fairly constant range, high-low, of 10/12 pips and it should be possible to keep reversing (on the 5 min chart say) every few bars, to obtain, after spread, 6/7 pips, assuming one's trading platform were sufficiently responsive. In a 3/4 hours, it looks possible to achieve 70/80 pips per unit.

Is this the sort of thing loop trading envisages?
How would one apply it to other pairs, where the degree of fluctuation is greater?

Thanks,

John

[Rachamim]

Nicolas,

Sorry I spelled your name incorrectly in my last post!

John