stop the name calling. don't you have any friends who are market makers or specialists who have whores and drug dealers to take care of. of course they are rumored to have families. some of best friends are...
1) yes - even liquid issues can gap. 2) see #1. If there is no buyer at a price, then you won't get filled.
u dont have to go back far, on feb 27 i had stops at IB on QQQQ and AAPL that failed to trigger, due to "crossed quotes coming from NASDAQ"..with the kind of technical problems at the exchanges we've been seeing on days of high volatility lately, u can only imagine what would happen to your stop when something really goes down The systems that hold stops are vulnerable at times of high volatility to their own internal failure and to their datafeeds getting corrupted as in the above real-life example. Can anyone please list the situations where a put will NOT protect you? I can think of at least one: if the markets remain closed like on sept 11 until your options expire...what about if a stock gets halted for a long time, gets delisted or goes bankrupt, what happens to your puts in each of those situations?
Most people do not see what is going on in the markets. Once a person has the displays and the strategy coding and a way to keep the record, then he can debrief and rexamine what happened. Usually if a person does not know what to look for or where to look, no observations are possible anyway. With respect to the four common games played in the commodities markets, what happens when some of the games are taken off the table? What happens to the unsophisitacted retail trader who is using some betting strategy and the usual set ups and a quasi money management whatever. As the market moved away from the testing of limits and the retesting of those limits. A lot of people were involved in applying their SOP under conditions where SOP wasn't remotely workable. Any one who understands opportunities and risk or its absence is going to tear new ones for an astonding array of conventional people. A person must monitor the markets and behave (act) accordingly. Lets deal with those who are able and what they see. The "protection" of the game players is there in a normal way. It can be read and it is taken into account. A T&S on 50 plus and a T&S on 1 or more show the normalcy. The DOM is showing the games in situ and the indicators and signal generation occurs with normal periodicity. The leading indicators are rolling along quite well and sequencing is operational The mode ratio of hold and occassional reverses is SOP. THe single tick range tick charts and their restart timers are working SOP as well. cremeing turns is SOP. BUT then there is an almost imperceptable decay in the Q of the monitoring and the routine. WWT's show up and so do the quant's favs anomolies. Tricky riffles across the system. black water fingers pushing across the chop from the crosswinds. The air is not smooth and the telltales are scurilous in their independance giong up the mast spreader set by spreader set. something is up even though it can't be felt in the whell or seen on the aft Q wave. But there is more noise coming down the windward side of the hull and the and the goose neck was waking up even with the boom vang tight as a drum. What first rattles the market was playing around for 15 minutes even though no real bar extremens were coming into the picture. It was defintiely time to be sure all the gear wasn't fouled or foulable and all lines needed to be rehearsed for use. I would have unclipped my bos'um's knife and drained my deck boots. Get out the roller reffing handles and drop the coils from the cleats. Then no one was playing at the thousands place holder And the DOM totals were not up there where they were. The prem and offset were on the mark ....and not coming off the mark very often. The single digit people were blithe. On the T&S on the DOM and on the dwell on the Tick timing clocks. The first move was played by all and there was hesitation on new protection. Thin protection was showing on the new holds. Dummies abounded ((contrarians) to keep the smart money filled. The usual HVS BUT too much for so little effort. The weatehr has set in and it is dark midday and the water is getting wet with spray falling on it from the dominant wind. This is going to be a line squal and it is going to be relentless once the games stop. four digits long over.... three digits are out ....two digits are either smart or dumb and both are stuck in place and unprotected. The DOM is thin , there are no walls, and the tick clocks are restarting so fast it is like they can't get more than one or two digits to show. The offset is closing down and crossing neutral and going further...... Plain vanilla cascading.... All smart fills are dumb markets. 10 point bars and accounts are being closed as much as any trading technique is being used. watching the 50's...looking for some 250's Sooo cool. The DOM hit totals of 700 on each side. Tick clocks were meaningless. Indicators (MACD , STOCH's) shut down right away. The stretch- squeese was upside down by more than the premium or twice the premium. Tight stops built the surge wave that then intercepted the loose stops and only smart money was opposite the stops and smart big money left so early it was unbelievable. Profit segment holds were as large as market spec margin levels. Bars were running at 25% of margin. This is a simple definition of small money accounts being wiped immediately; then money managed accounts being wipes second and only people who were intially sidelined surviving. There is no one available to take the opposite side of protection once the DOM is thin and there are no walls put in by three and four digit people to stop the cascade. There is no way a front runner is not going to take the whole ride and in big chunks. you never get out of coarse analysis "continuation" and you only watch medium and fine leading indicators for the fun of the experience. Having broker margin instad of market margin simply means that the leverage is about four times greater and a segment turns out to be four times broker margin. 27FEB07 was a very cool day and it showed how and why stops do not work and whole small accounts are taken out and then money managed accounts are taken out. Another example is the Nitro blow up at the end of 2006. It may still be on the chat room transcripts. This is more the slow freeze type thing compared to the faster stop strategy failure type blow out. To have a display and have a way to read it is important. It is much more comprehensive than any one of the 12 stop strategies I documents a while back. It is probably about the same as having 12 stop strategies understood and documented for reference. So starting with a display and a routine for reading it, there you are sitting and looking at the screens and logging and handling your accounts. You get the whiff. It is there. All in and on the right side. It is a simple situation. The BLATANT nature of that whiff and then the WWT's People leaving the scene of the accident made the accident. Having the display and having the routine is what makes trading transparent. When it doesn't add up it is going to be an accident. On a one way street. When there is nothing there to stop something it is not going to be stopped. Harlin on the Eiger. This is viewing the market. Trading the market during a market accident is the greatest money making experience to be had. Some people had their greatest day. They were on the right side of a broker margin times 4 single profit segment. This could account or half the profit of the day in this case. This all in , no stops trading (as mentioned, stops do not work during accidents) is what epitimizes retail trading at it's best. All out sentiment and extreme market pace was a direct result of people being in an accident where they were what caused to high profits to be made by others. Their approaches and beliefs are the causal factors for their demise on that day. It is not necessary to change one's ways as a trader. But it is necessary to take the steps to be able to see the markets. And it is necessary to learn to read the markets. right now at this point there are a lot of lucky people and that is simply because they are the people who were sidelined at the time the accident began and they sat and watched it. We flipped the camtasia on and we recorded a narration on another machine (laptop) as part of the day. We also debriefed. Altucher, a quant, calls one of his QQQQ strategies the QQQQ Crash. The thread is entitled Market Crash. This is all the convnetional orthodoxy naming things. It is a statement of the emotions of the approaches. Fear, anxiety and then anger rules these sorts of traders. When a person starts trading without stops, what could it signify? In my opinion, it signifies that he has a way to display the market and a routine to follow for trading. A trader works up to a place where he can operate in anticipation of the market while trading in NOW and he has a completely automated system behind the green curtain. In BigHog's terms this is the end game.
Probably not, but it may be. I don't think anyone who read the post had their account blown out. I felt that I could make a few points on stops were I to throw in something that a crew would have to handle or take the consequences. It is not much fun when a guy runnning the foredeck freezes to the mast and others have tocome forward to cut lines as a consequence. There are some serios readers in ET and anything that impedes they getting what they chose they want, really affects them. "Can stops fail in a market crash" is such a loaded title. Traders who are excellent do not use stops and they make more money in a "crash" than any other time.
Even worst than a stop not triggered is an exchange collapsing for some reason or having technical issues on tricky times and then the exchange (mkt) reopening waay down (or up)
I don;t use stops why? Cause you will always get a lousy price or they will fail. If your daytrading your eyes should be constantly fixed on the screen so why would you need a stop if you see the stock going down (or up)? Just sell it when you see fit. if you buy long term, the market makers CREATE volitility so shake out stops. If stock trades to the low end of the 'bid' for a wide bid/ask spread and your stops trigger that would stuck.
No, it is a point that is hard to make. We have different viewpoints. I feel that being able to see what is going on is the most important thing. I have displays that afford that. My operation is in NOW. My data set tells me that I am on the right side of the market. Since I know I am on the right side of the market, then the market, as it moves, moves in my favor. The question about the right side of the market is continually answers as I repeat my routine. I can make mistakes. The class of mistakes is limited. One major class deals with holding too long. I am always in the market). IF I do hold too long I make a little less on the reversal with respect to profits taken and with respect to the best entry (I missed it a little). The other class of mistake is reversing when a reversal is not appropriate. Here I deiscover, belately, that, in NOW, I am no longer making money after the reversal. I correct this mistake at the time I discover it and take small profits at that time. This is what appears as anti whipsaw. I am simply taking the other side of people getting whipsawed.\ with a segment of small profits. That is about it. As you can see, what I am doing as compared to where any one of a dozen methods for setting stops, is very different and also does not deal with anyof the prices in those stop value ranges. With respect to how fast things happen, I am using about 17 leading indicators of the price of the instrument that I trade. What this means is that the last thing I see in a sequence that indicates "change" is the extreme value of the price of the instrument that I trade. Think of it as a train of cars where the train goes up and down a series of grades. I am riding in the cabose and looking at the engine and the cars inbetween. Each car is labelled with a signal name. My money is in the cabose so to speak. If there is anything that is going to affect the cabose, I know it in advance. I know that there can be radio controlled IED's in this day and age and behavior. So I do have a field strength monitor in all logical frequency ranges. If I am running a lot of contracts, I am already knowledgable about how many partial fills I will be using and how many seconds apart they will be. All of this is quite far away from the world of people who are dedicated to using stops. In my opinion, they are using stops because they have no substitute for using stops. I looked long and hard at many many trading techniques and methods and the consequences of using those methods. Most are based upon entry/exit and using probabilities related to high probability trading. In that world stops are insisted upon at all times for very very good reasons. These people bet which engenders risk. I decided to not ever bet. I am in the market all of the time as a consequence. I figure that it is my job to be in the market and on the right side of the market at all times. This involves holding and reversing and it does not involve entry and exit. You may conclude from your vantagepoint that it is correct to exclaim to me "Are you kidding?". On the other hand, my view of you is that you are betting and taking chances and you NEED stops to protect you because of what you do. I do not question at all that you need stops and you probably are not in the market very much of the time. You may not be in the market at given times because you have determined it is too risky. I see that sentiment and pace take risk out of the market for any trader. Since I know the market sentiment and the market pace all of the time and I am in the market all of the time, I do not feel that being in the market carries risk for me. What makes it risky for my trading is simply me. I am my risk of trading. I handle my risk by using methods. These compel be to share responsibilities with the market by only doing my part and the market doing its part. The market tells me when to act. Timing is the market's job. My job is to get the message and take the advice of the market. I am just a drone or grinder. I continually take out of the market what it continually offers. I do pool extraction in an optimum manner that is determined by my effectiveness and efficiency. Stops are not part of any of this. From some viewpoint, I may be seen as a messenger. I notice that when that is in effect, it is common for others to "shoot the messenger". They do think that they have shot me but I notice that I am making money all the while. Engines are fun and they work at getting over the mountain, for me I just sit in the cabose and make money all of the time and without stops. Stops do not work , generally, when a market accident is occurring. Or in Nitro's case when he blows out by being "RIGHT" instead of being on the right side of the market when it is TELLING him what to do. Fro the humor of it he also thought my reults were photoshopped as it is now called. LOL..