Can stop orders be seen?

Discussion in 'Order Execution' started by mlsignups, Feb 1, 2006.

  1. Relatively new to trading so please excuse the simplicity or "dumbness" of the question.

    I am currently trading stocks through IB.

    I've read in a few places that a stop order can be "seen" and that the specialist or market maker can manipulate the price on thinly traded stocks to take you out if you enter a stop that is too close to the current price.


    I also believe I read at some point that if you set a trailing stop this won't be seen since it is changing on the fly until needed.

    Can someone clear this up for me? If you are looing to enter stop orders on fairly thinly traded stocks, what is the best approach (for instance, IB has a conditional order and I suspect I could have a conditional order to sell trigger at or near the stop price I want instead).

    Thanks
     
  2. FredBloggs

    FredBloggs Guest

    the secret is to never trade with stops - EVER!


    what you must do instead is only take winning trades - cos then you dont need stops.

    all the best
     
  3. Schaefer

    Schaefer

    Hey, I prefer the alert based stop orders that reside on your platform on your computer such as QuoteTracker, CyberTrader etc. This way if it does trigger, you may not be the first in line, but they'll never see your order sitting either.

    But that being said, just because it's not on the order book, it does not mean that MMs and specialists wouldn't know where your stops are :D They always have a pretty good idea where average retail traders would place the buy stops and sell stops. And run the range through to shake out the weak as always.

    Hope that helped and happy trading :)
     
  4. alanm

    alanm

    I simply try not to trade anything that's so thin that anyone would care where my stops are. Not that I use stops much to begin with. And when I do, I certainly don't try to be greedy by placing them in the exact spot of a breakout or resistance, like most of the lemmings. As such, I favor exchange-held stops because they are most immune to failures in my system, connection, broker's system, and broker's connection.
     
  5. mlsignups,

    It's my understanding that the specialists at NYSE can see the stops but stop orders put in on NASDQ can not be seen.


    You might try setting an alarm with the TWS at your stop if you trade mostly NYSE; that way, only you will know where it is at.




    Good Trading.
     
  6. What's better than running stops on a big fat THICK sonofagun?

    Nothing is that thick, that you can't game it with enough gunpower, especially on Nasdaq.
     
  7. thanks for the feedback so far.

    the "swing trading" style I am working through allows me to be away from the computer during the day as long as I have stops set. often they are just below something relevant - a channel, a moving average or similar. i would prefer to set the stops closer but don't want to be "shaken out" so i tend to set the stops further away to avoid this - but don't want to be taken out just because I can be seen.

    other alternatives i have looked at are conditional orders in IB, where I can trigger a sell based on a price condition of the same stock, which i'm almost 100% sure can't be seen. this would work as a synthetic stop but might be more effective in this regard.

    thanks

    Mike
     
  8. Using stops and let them being hit is the equivalent of exiting in a panic; or at least, the effect is the same.

    And yes, a stop is like a bird flying at close proximity to an experience hunter: he won't resist the temptation to bring it down.
     
  9. Please post your trades in real time so we can test the veracity of these statements--Thanks
     
  10. That is true, but if you have multiple positions you can't manage risk very well in any other way. You gonna buy puts on every trade?
     
    #10     Feb 4, 2006