Stopped to the tick !

[Blu-Ray 10]

I got stopped out today whilst trading the Eurostoxx, now I know getting stopped out is part of trading and I accept that, but it rankled me today as I was in a trade for a period and while it was slowing slipping away from me, my signals were still telling me I was correct.

 

The part that's eating me is that the Eurostoxx is a thick contract, so there were about 650 contracts at the bid, only 43 were traded @ 4343 (my stop) and I was lucky enough to be part of that 43.

 

So my thought was, when being in a trade for a length of time and your signals are still true, then after a period of time while your still in the trade, cancel your stop and then re-instate it and it would put you at the back of the queue.

 

Just wondered if anyone else does this at all?

 

Cheers

 

Blu-Ray

 

[Soultrader 12]

I no longer use hard stops but only mental now but what I used to do was to take my stop off once and then place it in again as price is approaching it. This way I am last in que. I started doing this from one occasion when I became the only 10,000 shares that was traded at the high of day. (I was short) I took a picture of the time of sale and volume at price to keep it as funny experience.

[brownsfan019 17]

Blu - there's a couple other options here. I recently posted over at ET about this and didn't get much a response.

 

Options to help minimize tick stop outs:

 

1) As you said, cancel and replace your order to get back the queue as long as it it is a LIMIT ORDER. If your stop is a market order, it won't matter where in the queue you may be as it will go to a market order as soon as price is hit. Most stop orders on DOM's are market orders by default.

 

2) Send a STOP LIMIT order or a LIMIT IF TOUCHED (LIT) order. The downside here is that price could go through your limits and you'd have to be quick on the DOM to exit. I would think on the thicker contracts like the ES and STOXX that this will be a minimal problem.

 

3) Send a stop based on volume traded. This is dependent on the DOM being used and offering this function. I have found that XTrader, Ninjia and ZeroLine trader offer this function. Open ECry currently does not but I have submitted it to the tech review dept.

[Blu-Ray 10]

Thanks for the replies, I think I'll take a look at LIT orders as that sounds okay to do on the Stoxx, unlike the Dax where I was getting massive slippage.

 

It's kind of funny thats it takes a stop like this to re-evaluate yourself, on reflection it's simple, first in queue on entry and last in queue on stops.

 

Cheers

 

Blu-Ray

[BlowFish 10]

I think you mis undertand stop orders. When a stop order is elected (market trades at your stop price) it becomes a market order. No queues. Unless you are using stop limits of course (which means that you are not completely protected as price can trade through you and you'll never get filled).

[Dogpile 10]

this is just an idea to consider because believe me, I know your pain. that is sick stop out. been there.

 

this kind of shit made me switch to something mentally easier --- entering on stops. this entry method allows you to stick a stop in at the swing low because you are entering AFTER the swing low.

 

enter on buy stop at the parabolic... or write your own indicator to do something similar.

[MC 10]

  Dogpile said:

this is just an idea to consider because believe me, I know your pain. that is sick stop out. been there.

 

this kind of shit made me switch to something mentally easier --- entering on stops. this entry method allows you to stick a stop in at the swing low because you are entering AFTER the swing low.

 

enter on buy stop at the parabolic... or write your own indicator to do something similar.

 

Interesting, I may just borrow that method after some backtesting.

 

So buy when the sar passes through and use the swing low as your stop loss.

Nice.

 

Thanks

[BlowFish 10]

Blu,

 

I have had 6 points slippage on a DAX protective stop. Cant remember if I have had more. Mind you I have seen it spike -40 points +40 points and back to where it started in a few seconds:doh:

 

I should take some time out and make sure you know the nuts and bolts of the exchange & your broker.

 

Find out exactly what orders are handled by the exchange natively, those held on your brokers platform, and those that are held at your client (if any). Understand exactly how each order works. There are many permutations and different things you can achieve. I also like to know a bit about the matching procedure the exchange uses and about block trades and other wrinkles. Up until recently several exchanges would not support some basic order types natively and brokers platforms simulate them. Simulated orders are likely to not work out well with the DAX.

 

 

There are all sorts of things that can happen that are a lot worse than a stop being hit. My worse was when the connection from my broker and the exchange went down. It happened just as my order was filed I thought it was cancelled. It cost me many thousands of $'s (and that was as a small lot trader). As a scalper it was painful. Now normally you would want your stop/limit held at the exchange not at the broker or on your PC, however it would not have happened with a simulated order at the brokers for example. S^!t will happen its not if, its when - knowing exactly how everything works wont necessarily prevent it but it will help.

 

Cheers.

[Blu-Ray 10]

Thanks Blowfish

 

Yes you're right, I feel a bit of an idiot now, as I thought my stop was a stop limit order, not a plain old stop order. My broker says stop limit orders are not allowed on that exchange, but I'm going to find out for sure if this is true.

 

As for slippage with the Dax, 4 points was my worst but happened several times and it was for this reason I moved over to the stoxx.

 

You are right, I need to also find out where my orders are held, as the scenario you had would be a nightmare.

 

Thanks again

 

Blu-Ray

[Dogpile 10]

  Quote

I may just borrow that method after some backtesting.

 

since you are entering on a little momentum, you want it to move right away... thus if it doesn't, you don't HAVE to wait for the swing low to trigger your stop.

 

if it does move right away in your favor, you can move your stop up fast. I often move my stop quickly to the opening price of the bar that triggered me in or to the low of the bar that triggered me in -- with logic being that the momentum you joined in on needs to carry or else you will exit for scratch or rounding-error type of loss.

 

another thing is if you do get the initial push up, you can take a piece off like 1/4 of the position and now keep a slightly wider stop to ride out some noise and the gain on the 1/4 position offsets the small loss on the 3/4 of the position for again, a scratch. you essentially get a free ride -- a free call option with asymmetric payoff relative to risk.

 

you occassionally get chopped up a little no matter what you do anyway. this type of method works for me because you can still catch a big move -- higher timeframe reward if you are right about the higher timeframe technical pattern with lower timeframe risk if you are wrong.

 

another option is to take a small initial position on a limit with a wide stop and wait for the parabolic to trigger to complete the position and then take your stop up to something near the swing low.

[MC 10]

  Dogpile said:

since you are entering on a little momentum, you want it to move right away... thus if it doesn't, you don't HAVE to wait for the swing low to trigger your stop.

 

if it does move right away in your favor, you can move your stop up fast. I often move my stop quickly to the opening price of the bar that triggered me in or to the low of the bar that triggered me in -- with logic being that the momentum you joined in on needs to carry or else you will exit for scratch or rounding-error type of loss.

 

another thing is if you do get the initial push up, you can take a piece off like 1/4 of the position and now keep a slightly wider stop to ride out some noise and the gain on the 1/4 position offsets the small loss on the 3/4 of the position for again, a scratch. you essentially get a free ride -- a free call option with asymmetric payoff relative to risk.

 

you occassionally get chopped up a little no matter what you do anyway. this type of method works for me because you can still catch a big move -- higher timeframe reward if you are right about the higher timeframe technical pattern with lower timeframe risk if you are wrong.

 

another option is to take a small initial position on a limit with a wide stop and wait for the parabolic to trigger to complete the position and then take your stop up to something near the swing low.

 

Thanks for the added pointers.

 

I like the momentum style but haven't played that for awhile. I used to play stock breakout plays back in my earlier days and they worked well.

 

I've been a divergence/counter trend trader lately and want to get back into being able to ride momentum as well. Especially when the market has a heavy trend going on, no point in fighting the wave.

 

And the timeframe comment is a perfect outlook for this style too.