Would a Limit Stop get a Trader in Trouble Today

Discussion in 'Order Execution' started by BlueStreek, May 6, 2010.

  1. Versus a market stop?

    Can someone explain the pros and cons of having a stop that turns into a market order, and a limit stop that must be filled at a specific price for crazy action like today?

    Would your limit stop get bypassed, skipped over today, or in after hours thinly traded markets?

    Should you always be safe and use a market stop and just chalk up slippage as the cost of doing business? Thanks
  2. olias


    It is possible that a Stop Limit would not be filled if there aren't enough contracts traded in that range between the Stop and the Limit price....especially if your limit is just a tick or two from your Stop price. If you are using the stop order as a 'stop loss' to get out of a position, you are probably willing to take the slippage you'd get on a Stop Market order, rather than not getting filled at all on a Stop Limit order. If you're using a Stop order to enter the market, then maybe you'd opt for a Stop Limit in that case.
  3. What do the most experienced traders who use stops as a main strategy against a clear setup that doesn`t go as planned to get out of the trade use?

    This is just a stop to get out once the setup is no longer valid with as little slippage as possible but definitely get filled.

    Your playing a break in the trendline, you enter just below the break, and put your stop just above the lower line of the upward channel channel.

    So you ride the breakdown if your right, and get stopped out if it is a false breakdown.

    What kind of stop are most traders using to get out of this trade with as little loss as possible, but always getting filled?

    Is there a preferred standard here that the professional stop traders always utilize? thanks
  4. Stop market only. Its crazy to exit on stop limit. In a liquid market you may get skidded for a few ticks on crazy day like today, but its alot better than not getting filled 20 points lower in the ES. Note to all Ninja user stop limit is the default exit and needs to be changed.
  5. piezoe


    Use market stops NOT residing on your brokers server, but in the cue ready to execute in order received. Market stops resting on a brokers server waiting to be triggered are dangerous on a day like today (or any day actually) imo, depending somewhat on the trigger the broker uses.
  6. Use market stops NOT residing on your brokers server, but in the cue ready to execute in order received. Market stops resting on a brokers server waiting to be triggered, depending somewhat on the trigger the broker uses, and then sent to the exchange are dangerous imo.

    I have always used manual stops, but my evolution of setups trading is best suited for stops electronic.

    At IB by default is is monitored by them and not sent directly to the exchange, should I always send it once I make the trade to avoid this delay?

    And so if I utilize regular stop, does use a trailing stop pose any more risk?

    What about manually overriding a trailing stop as the market dictates--is this more trouble than it is worth-or easy to do in a fast paced trading day? thanks
  7. Will this be ok?

    This is with IB `s presets:

    Attached Stop Order

    Order Type: Trailing Stop
    Stop Price: Parent Order +/- .20 cents
    Trailing Amount: 0.20

    Say for trading crude oil on a setup that I want to get out if it doesn`t break, and follow down with my stop if the trade breaks my way.

    Or is it better just to use a regular stop, and manually move it up as the trade goes in my direction? Thanks
  8. piezoe


    In a fast market it would be best to have your stops resting on the exchanges server, so long as it is allowed. The advantage to having them on your brokers server is that you can cancel and replace them as many times as you like without a charge. Some exchanges might charge for changes assuming they allow stop orders. I always thought it was silly to worry about people knowing where your stops are. That might be a factor for Goldman, but no one cares where my stops are. Besides we all know where the stops are clustered just from looking at a chart.