Pre-commitment devices: what binds your future self?
A pre-commitment device locks in the decision before the temptation arrives: the pending stop-loss, the daily limit setting, the account you can't easily top up. The future self is bound by the past one.
What binds you?
- the commitments you've locked in
- how they've saved you from yourself
- the temptation that slipped past them
The order types guide is pre-commitment in platform form.
Background: Market, limit and stop orders: which order type to use
The order types on a trading platform decide when and at what price you enter or exit. What each one does, and the mistakes that cost traders money.
What is the difference between a buy limit and a buy stop?
A buy limit is placed below the current price to buy on a dip. A buy stop is placed above the current price to buy if the price breaks higher.
Does a stop-loss guarantee the exit price?
No. A standard stop-loss becomes a market order when triggered and can fill beyond its level in a gap or fast market. Guaranteed stops, where offered, cost extra.
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