Is it possible for a profit target to slip you in at a BETTER price?

[steevcoco]

Hi:

Sorry for the noobie question! It's simple; but it's tricking me until I know what can actually happen. For a simple example:

Order is entered with a 5-tick profit target.
Price moves in favor by 10 ticks instantly.

Can there be slippage on the profit target price that closes it at a BETTER than 5-tick price?

[NinjaTrader_Brandon]

Hello steevcoco,

Thanks for your post.

Yes, it is possible to have positive slippage.
A Profit Target is going to be a Limit Order and the definition of a Limit Order is: An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.

If there is anything further I may assist you with don't hesitate ask.

[alabell]

This is pretty coming in equity trading, I assume it functions the same in other securities.

This is the notion of "Price Improvement".

A security can be $100.00 bid by $110.00 ask.

When you put in your (profit target) limit order to exit at $105.00, another market participant may have a hidden or "Not Shown" buy order at a limit price of 108.00.

If this is the case, you will receive an instant execution at the higher price. It will always be instant because it is the second order entered that benefits from the improved price.

[steevcoco]

Thanks for the extra clarity & info @alabell.