Can bad ticks trip stops?

Discussion in 'Order Execution' started by jftrader, Sep 29, 2005.

  1. jftrader


    As the thread title indicates I was curious if bad ticks can cause a stop loss to trigger. Thanks in advance for the help.
  2. You have to be clearer about what you mean by a "bad tick".

    Actually there might be something to learn here - what causes the various forms of "bad tick"s?
  3. Other than in pit-based markets (like commodities), where trades are reported by humans, I don't think there are "bad ticks" in electronic markets.

    Although there can be "outlier" trades, e.g. I've had my stop get triggered 50+ pips from current price, during afterhours (18:10est) stop-gunning spikes in CME IMM currencies.
  4. gimp570


    Yes they can.kinda...I know what you are talking about. I have had stops in on NYSE way higher than where the stock was trading and there was a wrong price on the tape that I am sure was later corrected and it triggered my stop...

    I dont think that there is much that you can do.
  5. Human errors?
    Computer glitches?
    made on purpose?
    How do you know...?
  6. "Bad ticks" are sometimes caused by stop-loss orders themselves in illiquid markets. YG spike a few weeks ago set off a few contracts around $13 higher than the high on pit-traded contract after arbs pulled out their offers.
  7. alanm


    It depends on who holds your stops, and whether they have tried to add protection for these instances. IB, for example, used to have stops that required two successive prices, or triggered off bids/offers, to try to reduce the number of "falses".
  8. The most common cause of a bad tick is human error, trades entered incorrectly etc...

    So the answer is yes they can but there still has to be the other side of your trade and if the bad entry is far enough away then most likely your trade will be fine.
  9. no need to have outlier trades :(

    if you trade forex then the stops may be triggered by bid & ask levels

    when market thin ("Globex" hours) then MM can see if there is anyone else and suddenly widen the bid & ask (have that happen to me). If there is a stop , well that gets then triggered....

    as they say: caveat empor

  10. jftrader


    Thanks for all of the good information everyone!

    Just to clarify what I meant...for example when I'm doing research in QCharts I notice yellow bars in the charts which I'm told are "bad ticks" that were later corrected. I was curious what would happen if I was long a stock with a trailing stop in place and one of these "bad ticks" occurred. Would my stop be triggered?
    #10     Sep 30, 2005