Has anyone used this type of order at OEC? It seems rather crude compared to IB's trailing stop from my experience. I talked to OEC support about it but they don't seem to think there is any problem. I wanted to see if anyone else has an opinion. My problem with OEC's trailing stop is that it continues to reduce your stop whether or not a new high or low is met. In other words, if the market is going sideways, each time it goes in your favor they reduce the stop so you end up getting filled despite the fact that the market has not made new ground in your favor. It would seem very hard to me to make money with this type of criteria and you would get taken out of the position prematurely. IB's trailing stop seems to be more intelligent in that it waits until a previous high/low is taken out in your favor before moving the stop. I'd be interested if anyone has used either or both and what your thoughts are. Thanks.
Are you saying that if I buy at 900, mkt goes to 910 and I have a 2 pt trailing stop that if the market goes to 909 and then 910 and then 909 again that you will get stopped?
Yes, in theory, that is what I think would happen based on my experience with their trailing stop. Under your scenario your first stop would be 908 after the market hits 910 the first time. Then after it retraces to 909 and back to 910, OEC moves the stop 1pt and you get stopped out at 909 after the second retrace, even though the market never made a new high over 910. I have only used their trailing stop once after I saw this behavior so I was wondering if anyone else has seen this happen or subscribes to their paper trading market. It would be an interesting thing to test.
I don't know IB's system, but in general, a trailing stop doesn't care or "know" what the market's doing -- if the price moves higher, the stop moves higher and never downward....unless I misunderstood your question? I would assume the moral of the story is in a sideways market to not use a trailing stop, otherwise you'll get chopped to pieces and stopped out all the time......at OEC I only use a TS when i am well into a serious trend, and at that point if I get stopped out, I'm okay with that.
If what you're saying is true, I think that is a serious flaw. The way I understand a trailing stop order is as follows: Market at 990, 5 point trailing stop means your stop is at 985. Now if the market goes to 993, your stop moves up to 988 (5 points trailing) If the market goes down, your stop price is not adjusted, so now let's assume that the market goes down to 989 (So the stop is not triggered) Situation, market 989, stop at 988 If the market goes up to 992, your stop is NOT moved, because the stop is less than 5 points away from the market. The stop should only be adjusted upwards, if the market rises to the point where the market is more than 5 points above your stop order. Hope this helps
I agree. It should function as in your example and that is how IB's trailing stop works and what I am used to. I'll see if I can get someone else at OEC who knows what the deal is with this and hopefully get them to see that it is a problem.