Protection against spikes in YM?

I've been trading YM for a little while now and am happy with what I've been doing. However, the spikes this week are concerning me. I wasn't in a trade in either case, but what would have happened if I had been?

I'm wondering what would have happened to my stop had I been long in either instance. Say I had been long with a 10 point stop and all of a sudden there was a huge dip like we have seen. What would have happened to my stop? Where would I have been filled? If I had been filled 150 points away that would be like having 15 losers in a row assuming my average stop is 10 points.

Are there any ways to protect myself in these cases?

I know there are risks with trading, but I'm wondering if this market is too easy to move? Should I go back to trading ES?

Thanks for your thoughts.

 

Steve is absolutely correct. The longer you are in the market the more exposed you are. Some traders limit that exposure by making quick precise trades. That requires waiting for your set ups. That requires discipline.

 

Isn't it possible to use STOP LIMIT orders (native or simulated) instead of simple STOP orders? For example, a STOP LIMIT order with the limit price 10 points below the stop price would ensure that if filled, your slippage would be limited to ten points only. Of course, your risk is not being filled at all in fast markets. But it does protect you from spikes. However, I have not traded YM, so I don't know whether you can use stop limit orders on this market.

 

It is my understanding that cbot does not accept stop orders period. Your stop order resides with your broker.


From IB:

CBOT (E-CBOT)
Stop Orders and Stop-Limit Orders: Stop orders and Stop-Limit orders are not supported by the E-CBOT. Interactive Brokers provides customers with simulated stop orders and simulated stop-limit orders. Orders can be placed at anytime during trading hours.

Special considerations for market and stop-market orders: IB defines regular trading hours (RTH) for ECBOT to be 09:30 – 17:00 EST (or the time of closing of open outcry trading for a given contract, if earlier). ECBOT defines the day session to commence at the beginning of the open outcry session. This has important implications for stop-market orders for contracts that commence trading prior to 09:30. Specifically, stop-market orders will not trigger prior to 09:30 EST. Customers wishing to use stop orders should select stop-limit orders and ensure the ‘trigger outside of RTH flag’ is activated.


ECBOT defines valid ranges for trade executions based on their definition of “fair market value”. Trades outside these ranges will be cancelled by ECBOT and they impose a severe $1000 USD per event penalty and these penalties can increase to $5000 per event. Customers must be aware that orders submitted at prices outside the ECBOT’s allowed ranges will generate a mistrade penalty and these will be passed on to the customer.

Closed daily from 17:00 - 20:40 and 23:40 - 00:15 ET for CBOT/IB daily maintenance.
Day orders will be cancelled at 17:00 ET.
GTC and GTD orders cannot be cancelled from 23:40 - 00:15 ET.
Stop Orders and Stop-Limit Orders: Stop orders and Stop-Limit orders are not supported by the E-CBOT. Interactive Brokers provides customers with simulated stop orders and simulated stop-limit orders. Orders can be placed at anytime during trading hours.

 

Have we lost a post here? There was a reply on here that has now gone.

 

Perhaps you should. Take a look in search under ES spike or fatfinger. CME broke a 25 point ES move during a CSCO earnings call - trades >8 points. There was also a >50 point move in NQ. A wave of these "mistakes" swept in in 02 and 03. I keep thinking it happened in ym also just after it was introduced in Spring of 02.

Because the contracts cater to small traders and the swings are precipitated by big traders in questionable circumstances, I suspected CME saw it more as a market integrity issue in deciding that 8 would be the limit. I don't remember what was done with the NQ incident, if anything.

Geo.

 

With all the YM posts, I went back to trading 1s and 2s, HOPING for a big gap. If they dont break trades on these moves, IMHO, its a good way to make a little ( or lose a little ).