Quote from jinxu:
I've noticed on a multiple occasions when I place tight stops on the ES, it would get hit and then immediately reversed. The first time I thought it was just coincidence. But then it kept happening over and over again. It's as if someone is intentionally trying to hit my stops so I would be shaken out. I thought it was just limit orders that can be seen. Can people see your stops also? I only trade one contract and was told by my broker that it wouldn't matter much.
Am I being paranoid? If not should I stop placing electronic stops and use mental ones? Or maybe use wider electronic stops? Who is able to see your stops?
The same thing happens to me all the time. Even in different markets like Gold. I swing trade that sucker so we are not talking about 5 or 10 ticks either. I've had stops hit within 10 cents (1 tick) when they are $10 or so away (what's that, 100 ticks). Also, i've been up $20-$35 and watch it come back to my stop, which i put at my entry price, and then head back up.
All that said, I really don't think anyone is coming after me so to speak. The "insiders" are definitely hunting stops, but they don't know exactly where the are. Even if they did, what's the point of moving perhaps hundreds of millions worth of action in order to clip your 1 or 2 (or even 10) lots?
I think a few things are the reason why both you and I have a bad feeling regarding stops. One is that the insiders definitely hunt for them, especially in the eminis, by whiping the market quickly above and below highs/lows, where typical stops reside. So even though they don't know where they are at, they are still coming after them cause they can guess where they are at. Secondly, people tend to have selective memory. The few times this happens, it stands out in their minds and they remember it far more than the 1000's of times when it doesn't happen.
Lastly, if it is true, then why not put a stop where you actually want the market to go? If i want to buy the ZG at $1150 and it is trading at $1175, why wouldn't i put a stop in at $1150, and then when the market falls to collect my stop, i cancel the stop and buy the ZG! obviously this doesn't work for the reasons listed above.
All that said, I don't personally even use stops anymore. Markets are choppy, they chop all the time. I just watch it without stops in, and give it a little more room than I can with stops. I typically do far better. If the market is absolutely collapsing i don't give anything any room, but usually the market goes to where your stop is and baarely touches it. Not having a stop in at these points has allowed me to hold on to future winning positions, and i have rarely if ever been hurt by this. I'll leave a stop in when the market is no longer supposed to go to where my stop is, but when we are talking about times that it is muddier, i'll play with no stops.
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