Limit Order Question

I just began an in-depth demo or CitiFX Pro, and the option of entering Limit Order is a question for me. Perhaps I do not understand this too well hence I am here. Can someone please clarify for me if my assessment is correct?

I am on the one minute chart and let's say it is at 1.2670 up on a trend (bullish). But I placed a short / limit order of say 1.260 expecting it to turn back. When I place this limit order, the order is immediately placed when it says specifically LIMIT order. Thus if the price never reverses and it hits up to 1.2690 then I would lose 30 pips - I would manually cancel order. My impression was that the 1.2660 short / limit order I placed was only going to execute if the price only reversed and it hit that amount which I set a limit amount for. Can someone please clarify if this is correct? Or am I mistaken with this concept? Is there a better way of doing such order entry? Thank you.

You are immeadiatley filled because your limit order is marketable. When you issue a limit order, you are saying to your broker I won't take less than X price on this trade. In your example, there was someone willing to buy for ~ 1.2670, and you just told your broker that you need a sell fill at no less than 1.2600, so he says oh well how about I give you a very nice price improvment and give you 2670.

The problem is that you are confused about order types and their differant properties. To carry out the trade you are describing, you have a couple options. You could issue a simple sell stop at the price of your choice. When price gets to your trigger price, a market sell is issued on your behalf. You could also issue a stop limit sell order. At your trigger price, a sell limit would be issued on your behalf. This would prevent slippage and limit your fill price, but you might not get filled at all. There are pros and cons to both.

I'd suggest you read Trading and Exchanges by Larry Harris. It will get you up to speed on the essential things you need to know as a trader, including order types.

What do you want to do in terms of market direction?

You said '...but I placed a short/limit...'

Do you want to buy or sell with that order?

regards
daytrding

As I look back to this question, I am elated to be where I am today as far as what I've learned and am thankful for what is ahead...

Here is help to the newbies, found on some FCM site (sorry I don't recall).

http://i51.tinypic.com/vxmfxv.gif