DO STOPS WORK WELL AT IB?

Ron,

According to Def and the rules posted by IB, it was done correctly. However, I do have a problem with the way they are handling stop orders. Even assuming all of this works the way it's supposed to, we are still locking in significant slippage. In my case, I was long and had a stop at xx.49. The stock never traded at .49, it printed .48 then continued to drop. Only when the ASK was posted TWICE at .49 did the stop trigger. The prints are irrelevant as I read the IB text...it's the posting of the ASK. I got sold out at .40. I was only holding a .20 cent stop anyway and I got hit with .09 cents more. This is a big problem in my opinion.

I feel that the rule should be CHANGED to two TRADES at or below the stop - OR two ASK posts at or below the stop - to trigger the order. This would stop you out even if it didn't trade but was moving down...which is the case now but would prevent the kind of slippage we are having now. I understand you can get a bad tick/print for a number of reasons, but two consecutive erroneous prints is much more rare. With most stocks that I trade with 65 day avg of 200K - 1M Vol, (and much less these days) there is consistently a .07 to .12 spread for a good part of the day.

This has caused me to have to "guess" what the spread is going to be and move the stop to a higher point. I'm not a fan of this.



 
KTM,

Thanks for the reply.

First of all when you sell its going to be at the bid price so why in the world would they use the ask, makes no sense at all.

Secondly, what if a stock gaps down one tick below your price and keeps trading down. Does that mean your stop will not go active?

These orders should be called Maybe Stops. Whats the point of entering a stop order if you cant be sure it will be executed.

I am interested since I opened an IB acct but have not traded yet.
 
If it gaps one tick below, it will NOT go active until the ask is posted twice at or below your stop, regardless of where the tape is printing. That's my understanding, I may have misread this.
 
It has happened to me more than once (several times actually) that (at a sell stop) the ask was hit and passed two or three times, but the stop just did not go off. Had to cancel the stop and get out manually. Stops at IB are definitely very unreliable. If you use stops as your main way of exiting, IB is not the broker for you! Use it as an emergency exit only, in case your system/phone company goes down, and then just hope it will go off at some time.

Furthermore, if the stop does go off, there is a big chance that you get filled very unfavorably. Last week I was filled on my stop (when it finally went off) $0.40 or so below the bid that was shown at the time it went off. This was on a stock that had hardly any spread (I don't remember which).
I just don't see why that's still called "Best Execution".
 
THANKS Ron!!!

That's my point too.
By the time the ASK catches up with the stop price , "STOP LOSS" should be just called "loss"

I'm not refering to daytrading but this mechanism makes Swingtrading stops almost impossible because you are not watching your open position every second .

No complains about BEST ECN.I've had two bad fills so far which is not bad.Usually it fills good and very fast.

Is IB PLANNING TO REVISE STOPS MECHANISM?


 
One vote for a complete re-think of the stop triggering mechanism.
BTW, if anyone thinks that the stop orders work as advertised, make some tests, and then think again.

My 2c

Guido
 
This stop slippage problem was very bad again today. It appears that the stops are getting delayed by about 30 seconds on my two that got hit today. Both were short covers. The first was slower moving - after the bid posted twice above my stop, the order activated and printed exactly 30 seconds later. I lost nothing on this because the spread was .12 anyway, but I could have.

On the other stock, a sharp rally occurred. After the bid printed twice above the stop, the system waited almost exactly 30 seconds before the stop was activated and the market buy (covers) were printed at 31 and 32 seconds respectively. The bid actually printed 6 times and the stock rallied hard and fast...BUT the order activated and covered exactly 30 seconds after the 2nd bid printed.

I called IB tech support about this. The rep created a ticket and is emailing the programmers and will get back to me tomorrow morning. I'll keep you guys posted.

PS It would be helpful if anyone has a stop that hit today to go back over the T&S and see if this is what happened to you as well.

 
You guys scared me. I think I'll wait on funding my IB account until I know stops work. I could be decimated since I use all stops to enter and exit on my swing trades and don't watch much during the day. A friend of mine uses IB for swing trading and said he's never had a problem though? Maybe he doesn't mind a lot of slippage?

I'm paying $10 each way at my current broker (Brown & Co.) but my stops are right on, so going to $1 to $2 per trade isn't much savings if you lose $20-$40 in slippage.

Thanks for the info.. Dave D.
 
Dave,

I'd like to know what your friend is doing to get his stops to execute. I've only been here a week and will likely close my account early next week short of some drastic change by IB. The stops simply don't work. I also use stops (at Brown as well) for 100% of my exits and the slippage this week alone has been unprecedented for any brokerage account I've had. There is no way a swing trader can depend on the stops here at this point. Brown and most other brokers execute stops based on the trades, not the bid/ask. When I set a stop based on the chart, the chart is the actual trade history...not the bid/ask history...I could care less what the bid was if the stock never traded there.


See the other related thread for the whole story.
 
I think some may have forgotten that the size must also be considered on the stop.If you enter a sell stop for 1000 shares and bids come in for a couple hundred you wont get a complet fill.Plus time of order entry determines your place in line.If many stops are at the same price once triggered the fills go in order of FIFO.
 
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