Stop Order Usage

Discussion in 'Order Execution' started by regough, Mar 18, 2003.

  1. regough


    I have used Stop Loss orders from day 1 of my trading(thankfully, probably why I am still trading:) )

    My question is this: Is it possible(and/or advisable) to use a stop order to get you IN to a trade- for instance, if ES has bounced along at 850 for a few hours and I think that if ES breaks 850 to the downside it may "crumble"- can I put a stop order to sell at say 845 and another stop order to buy at 852(just in case, it doesn't "crumble" when it hits 845?
  2. Bouds



    I use "stop loss" orders to enter a trade quite regularly, especially if it is at a trendline or S/R break level.

    Not sure if this function works with all trading platforms but can't see any reason why not. I trade out of the UK using a UK platform that does offer this functionality.

    Being completely stop loss disciplined, what I should like to see is for a linked stop loss order to to be activated once the first stop entry order is filled. Don't know of anyone that offers this.

  3. Magna

    Magna Administrator

    Of course you can put a sell-stop order at 845, or a sell-stop-limit order if you are afraid of a fast-moving down-market triggering at 845 and filling you much below that. As to the buy-cover order at 852, most platforms don't allow those orders in advance, usually you have to wait until you're filled on your sell-stop, then enter the protective buy at 852 (maybe linked to a target buy at, say, 835 etc.) A lot of it depends on your software.
  4. If you use Interactive Brokers, you can link your entry stop order to your exit stop order. This is available in recent TWS builds.

  5. Just a note. Stop orders are accepted by the NYSE & AMEX specialists . NASDAQ Market Makers does not accept stop orders. If you use stop orders on NASDAQ, it's a function of the software.

    Stop orders can be used to protect a long position or close out a short position .You can also use stop orders to buy "breakouts" . Assume I'm long 1000 shares of XYZ at 50 and 51 is a "breakout' on the upside. I could put in an a stop order on the NYSE to buy 1000 XYZ stop @51. When the stock trades at 51, my order becomes a market order to buy 1000 XYZ. Buy using a stop order to buy the breakout, I will not miss the breakout in the stock .

    Gene Weissman
    E-Brokerage, LLC