Protection stops being chased and hit?

Discussion in 'Risk Management' started by shortbleu, May 28, 2009.

  1. Hi,

    Say, I enter a long position on the future DAX at 4800pts and place an automatic protection stop at 4795pts as soon as I've opened the position. Can other people see the stop at 4795pts, is it visible as a protection stop order by other traders, or visible as a normal limit order other traders, or not visible at all. If visible as a protection stop, others traders could play the game to hit my stop and make money from me? I heard traders chasing stops, is that right?

    I am not using / placing automating stops from a trading platform in advance when I open a position, I just exist the position manually when I am offside by 5 points. Shall I continue to exit manually when I loose 5 points or shall I place automatic protection stops as soon as I've opened a position.

    Please not the aim of this post in not do discuss at which level the stop should be placed or about position sizing. I am interested in manual stops or automatic stops pros and cons.

  2. Its not visible.

    However its not hard to predict where there will be a supply of liquidity and in the absence of a strong move it is in most participants interest to test such areas and mop you up :)
  3. With much respect. I will like to clarify that it is in the interest of the few, not the most.

  4. Yeah true.

    The majority of money is happy to just do its thing - just crossing the prairies in their wagons. But some money will take advantage. I confess that if I see an easy area I'll position to enjoy the spoils if a little stop raping takes place.
  5. clooch


    stop raping?? thats funny. I call it filling the basket.. Kind of like passing the money basket in church..

    Have a good day
  6. Hello Kiwitrader,
    I said 4800pts as an example, and was not thinking about the psychological level it represents as a round number.

    Same question if I buy at 4767pts and put a protection stop at 4762pts (ie not a round number of psychological level)
    How can you rape the stops if they are not visible?

    What are the pros and cons between placing a protection stop as soon as you enter a position or exiting manually once you've lost 5 pts?
  7. help please:p
  8. spd


    If you get caught on the wrong side of a nasty move, manually closing your position could turn your 5pt loss to 8,9pt.... loss. Bad things can happen real fast.
  9. Just stop trading.

    You haven't taken the time to learn how, so you come on here and ask stupid questions and expect someone to give you something, instead of trying to do (just a little) work and figure it out for yourself.
  10. That is a very tight stop with the DAX, specially that last 5 days...what is your ration to win 2-1? 3-1? 4-1?
    #10     May 31, 2009