If I enter an order, do the big boys know it is a stop or just a new position? Can they try to hit my stop to knok me out? I am talking about the electronic at CBOT, CME and Eurex. Thank for any comment.
Nobody can 'see' stops. But it is no secret at all that stops are put in likely and predictable places, and that some big traders routinely press new highs, new lows, and pivot points in an attempt to fish for a continuation of market momentum through stop-induced orders. Makes perfect sense to me - it basically amounts to a free option. It all amounts to this - you never really want to put yourself in a positon where you are with the rest of the herd. That doorway gets awfully small when everybody is trying to run through it at once. I'm not advocating countertrend trading - but instead try not to be in a position where you need what everybody else needs at the exact same moment in time.
Would somebody who has experience with electronic books elaborate on where the stop is kept? For that matter where stops in the pit are kept? When I traded the big S&P my broker would tell me to be careful at certain levels cause there were a preponderance of stops there....but I never asked him for the mechanics. As for listed stocksThe Specialist keep the stops in the book...the buy stops on the sell side and the sell stops on the buy side.... Any wisdom on this?
In the pit, the stop order is held in your broker's order deck (or handheld) with all the other orders, which are arranged by price. It isn't shown to the pit at all until activated by trading through the stop price. As for knowing whether it's a stop, it isn't indicated to the pit as to type. Once activated, it will just either be shown as a buy or sell. As for picking your stop, the pit might try and run a price where there are likely to be a bunch of stops (e.g. just over the previous day's high or just below the previous low), but the idea that anyone is trying to pick off an individual small stop order is just fantasy, there isn't time, motivation or risk/reward to push prices to do it. If you place your stops where a lot of others do, however, they will probably get picked off from time to time. Good trading, Jessie
Yes, unless you are very careful and have high skill to hide your track, "they" are watching and analyzing what the small investors are doing. "They" always try to screw most of weak-mind small investors. Be careful.