I trade size on ES and few others, never use stops as that could cause undue slippage beyond the first hour of trading, I have an area in mine I will get out, all programmed now, and will exit at so many at a time based on percentage available on the DOME, so if showing 280, will exit 80% or more then again and again till out, but my fail safe exit seldom gets hit, it is often reversals and again getting in on percentage so I get my price of becomes a limit.
I almost always either have a stop or a serve side oco combo if I want a stop/target. I always fear the disconnection issue and want to be safe as possible. Most of the time when I scalp, I just place out a hard stop and work a limit order quickly or bang out quickly and cancel the stop order so technically there are times when I have a limit on one side and a stop on the other with no OCO. I need to work on that.
even if you're disciplined enough to honor your mental stops, one thing to consider would be using "disaster" stops in case you lose connection or have power outage etc.
A few reasons scalpers don't use hard stops. 1. They have the mental preparation to pull the trigger with no hesitation. 2. It takes too long to set stops. 3. Even if you set them automatically, we don't want to trigger it by accident since they are typically very close to bid or ask. 4. Connectivity is not an issue at a prop firm. They have redundant lines. If you have connectivity issue at home, have your manager's phone number on speed dial and have him/her kill your positions asap.
1-That gives a lot of credit to a trader for joining a prop firm with $5K to $25K which is the most common. 2-We offer hot keys and hot buttons-very fast 3-I agree, during times of stress, markets can be very jumpy with wide markets that can initiate a stop. 4-Most JBO prop firms have remote traders. Even in their facility, with redundant lines, lines to the routes can and do go down. This can affect your ability to execute a stop as stock exchanges don't hold them, they are server side or on the desktop software. IMO, stops are valuable for a day trader but have less value for a position trader or swing trader. If you are concerned that a swing trade may go bad and you want to limit losses, buy a put to hedge or buy an ITM call instead of the stock to limit losses. IMO this works better than stops for swing trades. There is the tendency for some traders to buy more calls than the stock because you are limiting your losses. I think this works better when you match deltas and don't over do it.
Connectivity can be an issue if you are trading from home. At my prop firm we always had hard wired connections into dedicated trading PCs. The PCs were only for trading and we were not allowed to install any other software on them especially internet browsers. We had a back up fibre wifi that could be used. In addition I always had my laptop with me and a mobile internet connection available as a 3rd line of defense. You then have the risk managers and clearing telephone number if all else fails. We would never use stop orders as you could get a very bad fill depending on the liquidity of the market you are trading. I can only remember a couple of times where the software froze up and shouts of 'is it down' went around, the most I ever remembering it being down was a few seconds. By far the more scary events were when there were software glitches with position marking, especially if you had 5+ positions on, i challenge anyone to not shit their pants if there is sizeable money on the line. Then stuff like mistakes on EOD statements could be a challenge. Say you receive the EOD statement and it says your open positions are different to what your software is saying, properly scary, thankfully very rare. In my time I did not witness any broken trades but I hear stories of people who traded 9-11 and 7-7 had trades broken. I can't imagine what that would be like if you held some large spread position cross exchange and trades were getting busted. GL
Yes if the market is liquid, what if the market is not liquid then you are going to get royally shafted.
@propwarrior I had a stint in a prop trading firm a while ago and I witnessed a situation where a scalper, not using hard stops, was not able to get out of the market but could see it going against him. I don't know how this happened but that was the case. I can tell you, I have never ever seen such an outburst of sheer rage - the guy was all red in the face, sweating, screaming, smashing his keyboard and I thought he was going to kill the risk manager who was just as helpless as he was. Eventually they made him flat but the damage to his account during these 10, maybe 15 minutes that day was enormous. Consider this and the fact that relying on phoning your clearing firm is not always wise