Market If Touched

Market If Touched

Market If Touched ("MIT") is a stock purchasing term.

An "MIT order" will be executed when the price is touched (when a predetermined value has been reached and the futures contract will trade or bid at the price.) [cite encyclopedia |last=Carew |first=Edna |encyclopedia=The language of money |publisher=Allen & Unwin |location=London |year=1985 |pages=210–211 |isbn=0-86861-439-4 |oclc=12938967 |title=Market-if-touched order |url=http://www.anz.com/edna/dictionary.asp?action=content&content=market-if-touched_order |accessdate=2008-08-15]

Stock buyers can place an MIT order to buy or to sell. An MIT order-to-buy becomes a market order if and when the commodity trades, or is offered, at a specified price or lower; an MIT order to sell becomes a market order if and when the commodity trades or is bid at a specified price or higher.

An MIT order differs from a limit order in that the order becomes a market order once the MIT price is reached. The order must be filled, even if the market takes a turn in the opposite direction.

Example

The order reads to sell 7 June Deutsche marks 64.83 MIT. Let's say that a trade occurs at 64.83 then the next three trades are 64.82, 64.81, and 64.80. Our order is filled at 64.81. This would not be the case with a limit order to sell 7 June D-Marks 64.83. We would not necessarily have a fill at 64.83.

An MIT order to sell is started when the market trades at or above the entered price.

References


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