It seems to me that the problem could be fixed by having TWS generate a random trailing stop, between 3 and 8 percent. That way there would not be a large pool of stops right a 3%, for example. Of course, the user could modify the number if they wanted to, but this way the users who just use the default setting still have a trailing stop somewhere between 3-8 percent. Perhaps better yet, there would be no default number the user would have to pick one himself which would introduce an element of randomness. I don't agree with the whole scenario either. Who doesn't sell during a selloff, trailing stoploss or not? Seems like a lame excuse to me.
It's a spurious argument in IB's case ... it's like saying EVERYONE is using the same TA to make their decisions. Ridiculous. In any case, IB DOES offer trailing stops ... thru Excel or thru ActiveX etc. Anyone with a bit of motivation should be able to setup a simple system to handle trailing stops. And if you can't handle the programming yourself, there are dozens of 'kid' programmers at the local community college who can. as a friend of mine used to say 'piece of pie'
Actually, I would humbly disagree that trailing stops are not the same things as technical stops. TA stops as you pointed out are placed at support levels, etc. The whole point of a trailing stop is to let your profit run regardless of the trend, next support level, etc. In addition, only a set number of stops would be set at a support when TA's buy a breakout. Mostly those that bought just above the breakout and before the next base would set a stop at the same support. But with a trailing stop, as long as the stock keeps going up or even bases with dipping too much, every buyer with a trailing stop gets dragged along and the trailing stops get piled up, all right below the price. I agree that IB should offer trailing stops though. I mean, one could argue that there are doomsday scenarios for any kind of order, as long as the right conditions are met.
That's the most ridiculous, hilarious thing I've read in a long time.All those 100-200 share stop orders could really cause some mayhem!!!
Sure like to know how T-Lo feels about trailing stops. Her opinion would put this matter to rest. mktman
You guys are just too damn funny! I had to double check the calendar, I thought maybe it was April 1st again. To be more direct....That is the stupidest thing I ever heard. Maybe IB should do a lobotomy on all those folks holding mental stops, too. Yeah, that will fix 'em! No more market crashes, everbody be happy! Free lobotomies for all! Regards, TAfool
Although I don't agree with the chairman's view on trailing stops, I think I understand what is leading him to that conclusion. The crash of 1987 was blamed on portfolio insurance, which has the same potential effect as trailing stops. Personally I believe that the chairman is falling victim to a popular heuristic and for fear of a crash happening again, he is against anything that could cause something similar. By the way, I also do not believe that portfolio insurance caused teh crash of 1987. Shiller sent a fax on the same day to major traders around Wall Street and asked them why the market had gone down. By a signigicant majority they said the reason they were selling was that others were selling. A feedback loop that had nothing to do with anything except being human.
Okay. I get it now. IB will not let traders/investors use trailing stops because they think QQQ (ect) is going to crash and IB will end up liquidating all of their accounts and they will be left without any account holders. So IB is actually covering their own butts...