Stops are still lousy at IB

Discussion in 'Trading' started by Grabbit, Aug 29, 2001.

  1. akhuto


    tntneo you said
    " All this is valid because I stay in front of the screen and I can see when a stop order goes live. So, I remain ready to modify the order [which is another great feature of IB. once active you can change the limit price very quickly and as many times as you want until you are filled]. "

    Can you explain me that ? Do you transmit the order or not?Now I'm confused

    Sorry I think sometimes that I don't know well ibw as well as I thought? :eek:

    Thanks !

    #21     Aug 30, 2001
  2. tntneo

    tntneo Moderator

    I do transmit the order. It becomes dark blue.
    But I stay in front of the screen and if it turns green I know it is live so I will follow what happens like a hawk.

    Also, because you can see the limit price of the stop limit, it is easy to check the page, where the last trade happened and the price. Quickly I can compare the prices, in case the stop was not executed.

    It is very rare for futures, but indeed it happened to me once I recall. Usually stops are a last resort, so I they are rarely hit, but it happens. I hope you see what I mean now. Nothing big at all. Maybe I just was not clear enough the first time.

    #22     Aug 30, 2001
  3. Turok


    >Thanks for your elaborate reply.

    Way cheaper than over-trading these market conditions. :)

    >Where do I find that triggering system? I only
    >found some general remarks on their website.
    >Could not find the "double hit rule" either, or
    >did they abandon that?

    You know Grabbit, I have limited most of my comments to something I know about -- routed orders. I have purposefully avoided the "triggering" discussion because I have never looked into it and my knowledge is limited to what I read in this forum.

    Your question prompted me to investigate for myself and I'm here to say that I have no idea what triggers IB stops and anything I've said regarding this should be discounted to the point of uselessness. What I see on the IB site is not what I've read on this forum and on top of that I could be confusing perfectly accurate information.


    I will now limit my comments to things that I have studied. :)

    >You are actually saying that IB nor any
    >other broker has any control over the way
    >the ECN order is executed, it is pure
    >computer logic.

    I'm not 100% sure that I understand your question, but I will say that it is most likely that the only control that a broker has over a transmitted ECN order is through the type of order transmitted. A possible (but doubtful) exception to this could be the brokers/ecns who are one in the same entity (Arca/Townsend, Inca/Protrader, etc).

    >So any tampering is out of the question?

    Tampering is never out of the question.

    For it to be significantly profitable however, in the few penny range that you and I are discussing, it would have to be done often and anything done often can be recognized, traced and prosecuted. If I even semi-regularly was filled only one penny off what I expected I would be tracing the sh** out of it. (and since LVL2 data is stored and openly available, it is all very traceable)

    I don't get my data feed from IB. I have yet to get a fill on IB that wasn't what the data said I should have gotten (course I've gotten my share of fills I didn't like from all my brokers). For there to be tampering on IB's part, they would have to be in bed with both of my data suppliers making me see something that is different from what is really the market. Not likely.

    #23     Aug 30, 2001
  4. Rigel


    In my experience, I'm 46 years old, even the most honest sounding, decent seeming, forthright appearing, best looking, friendliest people will often rob you blind if they think they can get away with it. I don't think everyone is that way but in my personal experience, the dishonest ones I've had the displeasure of dealing with went to extrordinary lengths to appear as "good people". Church, clothes, their apparently kind, honest, and forthright manner. But what this appearance allowed them to do was to prey on the trust of their unsuspecting victims. The only thing that limited the amount of damage they could do was their reluctance to break any legal laws, which would have publicly exposed them for what they were. In other words, if they thought they could get away with stealing, lying, etc., legally then they would do it. Morally these people seemed to have no limitations. As far as the law and brokers go, I don't have any education or experience on how that all works but I imagine that it is possible, though difficult, for the legal authorities to spot illegal practices in the major markets like nasdaq, nyse, etc., but some brokers, maybe most of them, also have internal markets which they refer to as "in house". It seems to me, remember that I don't have any experience, just hunches for now, it seems to me that the legal authorities wouldn't have easy, instantaneous access to the flow of these trades because the trades are never transmitted to the national markets. This would make it very tempting, for some, to engage in illegal activities such as front-running. Human nature, unfortunately being what it is, would almost guarantee that at least some of this in-house trading was dishonest. I don't think I'd use stop orders. If I ever did I would watch them like a hawk. My advice doesn't concern any individual brokers, just what I've learned in general about people from my lifes experience.
    #24     Aug 30, 2001
  5. Grabbit


    Rigel, I think you very rightly make the distinction between illegal and dishonest. I don't think any broker would try to break any law or regulation, they know too well that they won't get away with it.
    But in matters of money a good dosis of mistrust/suspicion seems to me a healthy attitude. There is no reason to believe that brokers will work in the best of your interest. Anything that stays within the law will be acceptable for them and I don't think that honesty is something they care a lot about, and maybe they shouldn't, after all it is their job to make money, within the margins of the law. The law is their moral, and who could blame them not to take any other morality into consideration?
    This does not mean that legal but dishonest actions are acceptable. And that's exactly where my suspicion comes in.
    As a simple trader I have no or very little insight as to what games are being played, how they are being played, how it is all organized, who all the players in the game are etc. etc.
    And actually I'm not too interested. But I do keep my suspicion, and I'm glad I do.
    #25     Aug 30, 2001
  6. Turok


    >In my experience, I'm 46 years old, even the
    >most honest sounding, decent seeming, forthright
    >appearing, best looking, friendliest people will
    >often rob you blind if they think they can get
    >away with it.

    You are so right there.

    As to the "in house" trading that you suppose. It's certainly theoretically possible that IB could be hoodwinking me into thinking that I'm doing business with a random participant on Island while taking the other side of my trade, but since I get my two sources of data from 1: competing broker (Townsend) and 2: independent source (qfeed), there is no way for IB to be cheating me out of any monies.

    If Island is on the inside of my independent data feed at 25.25 and I get filled at 25.25 I really couldn't care less if IB is the entity on the other side.

    If Island is on the inside at 25.25 and I route to Island and even occasionally I get filled (purportedly on Island) at 25.24, while the Island bid stands and doesn't increment down in size, I would know that I'm getting screwed somehow and I'd sure as heck be all over it.

    Since I've got the tools, and track my stuff so close, I can say that other than the very rare anomaly, I have never had any questions about my executions through any of my three EDAT brokers (IB, MB, Protrader). I have had to file numerous trade complaints against the MMs through my Etrade account and I was able to win all but one.

    #26     Aug 30, 2001
  7. def

    def Sponsor

    a firms reputation is built over time. with detailed audit trails, millions of executions, the largest institutions who happen to be competitors when it comes to prop trading as clients, thousands of people staring at the screens each day, I find it hard to believe that some of you imply that IB tries to do something dishonest with your order. The firm doesn't sell stock order flow and provides a great commission. External Auditors have reviewed the firms routing and the results are posted on the web site. If all the above doesn't lead you to believe the firm is honest, go elsewhere.
    #27     Aug 30, 2001
  8. tradex21


    Rigel You are not totally wrong in being a little suspicious. I use to trade on the floor in Chicago(futures) and any floor broker worth his salt would usually have a "bagman" at his elbow. But the business of a bagman was not totally dishonest, they are in the business of "taking the other side of the paper". And I always gave a price adjustment to a floor broker if he asked for one.(This is always in favor of the retail customer who the floor broker felt deserved a better fill.) A dishonest floor broker and his bagman will go out of their way to rape a retail customer however. For example I bought a Crude Oil contract a few years ago through a retail account on what I thought was a 62bid/63offer/64at worst market. This prick went "through the market" and filled me at 69. This was in the lead option where the volume was 88,267 that day. There were ample, ample sellers at 65,66,67,68 let alone 69. They came back with the old saw it "was a fast market", yeh a fast market for him and the "bagman". Hopefully electronic markets are going to put and end such shenannigans. But wherever there are bright people around banks of computers the fact that they might try a way is not totally out of the question. You are always at risk when you enter a market order or a "stop loss" order. Never be naieve.
    #28     Aug 31, 2001
  9. Grabbit



    Please don't take all this personally, but "Trust us or leave us" has never been very convincing to me.

    However Turok has shown that with all the regulations and controls and openness (to those who have the tools and the knowledge, like Turok, that is) it has become extremely difficult to cheat upon the market without it being noticed, and also that IB does not seem to do anything that might be called dishonest. Period. Fine.

    But does that mean I'll lean back in confidence that all will be allright at any time? No. At any firm irregularities can and will occur. It is naive to believe that this "does not happen at my firm". Maybe it doesn't now, let's assume that. But I'm happy that there are ppl like Turok who have the tools and knowledge to check things on a continuous basis. And I personally will be on the lookout as much as I can and have time for.

    In my country (somewhere in Europe) you trade stocks through a bank, not a broker. I've been with four different banks, three of which made mistakes on a more or less continuous basis. All mistakes were always at the cost of the client. I would be stupid to not have become suspicious in the world of stock trading. And all those banks are under strict regulations, need statements from their accountant etc. of course, but that does not mean an awful lot to me.

    At one bank (a big one, active in the USA as well) I did two IPO's and sold within a few weeks. That's five transactions, if you include initial funding. On those four transactions they made so many mistakes at my expense that I have 1/2 cm pile of account statements because of all the corrrections they had to make. I think I knew their phone number by heart at that time.
    Then without any notice, they changed my account from an equity account into a check account, saving them the trouble of having to pay me interest. No need to say that when I discovered that, I immediately emptied my account. To me they're a bunch of crooks.

    What I mean to say by this is: this kind of thing happens. And anyone who doesn't like being bitten: beware of teeth!
    #29     Aug 31, 2001
  10. def

    def Sponsor

    i didn't mean to imply you shouldn't check all details as certainly mistakes can be made. What I clearly meant to say is that IB has a solid reputation and the implication that the firm does anything unethical with an order (i.e. doing anything but a best effort basis to obtain the best price available) was totally off base.
    #30     Aug 31, 2001