Setting stops

Quote from HolyGrail:

When traders place a good till cancelled stop you give the market maker or specialist a great deal of power. If he has a huge buy order and there are many stops close to the general area where the stock is trading he will take out the stops every time. The more potential volume is at a stop level the more likely it will be hit.
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I still dont see your point.
I presume you have some price-level at which your 'alert' is set. When the MM is breaking the alert, what will you do? Are you saying 'o, it's just the MM, no need to take action'? Then at what level will you take action? And why did you place the alert in such an obvious stop-location in the first place.

Maybe by not using stops you are just delaying your reactions, which sometimes is good, but for the wrong reasons.

I always have a stop in place, so I'm safe even if I can not get to my position because of technical outages of any kind.
I change them stops at will, sometimes several times per minute. Almost all my positions are closed out by a stop, never by an explicit order.

Not using stops because you're scared by the MM is bad tactics, IMO.

Ursa..
 
Quote from Surdo:

That is what markets are for!
If we all agreed, we would all be on the same side of the market.
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Wrong. You are suggesting that you don't use stops because you have a entry/exit plan. Of course you have a plan, everyone has, or should have. And that what stops are for.

You implying that using stops is for those who don't have a plan. That is untrue.
I don't see anything you can do with 'alerts' that improves your planning. It only makes for fuzzy situations in which you have to decide in an 'alerted' mode, which is not sub-optimal at best.

Ursa..
 
Quote from MajorUrsa:

I still dont see your point.
I presume you have some price-level at which your 'alert' is set. When the MM is breaking the alert, what will you do? Are you saying 'o, it's just the MM, no need to take action'? Then at what level will you take action? And why did you place the alert in such an obvious stop-location in the first place.

Maybe by not using stops you are just delaying your reactions, which sometimes is good, but for the wrong reasons.

I always have a stop in place, so I'm safe even if I can not get to my position because of technical outages of any kind.
I change them stops at will, sometimes several times per minute. Almost all my positions are closed out by a stop, never by an explicit order.

Not using stops because you're scared by the MM is bad tactics, IMO.

Ursa..
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The point is if your stop is anywhere close to the market price you better believe you will be stopped out. There is no advantage in giving the market maker a guaranteed market unless you ARE the market maker. Having stops at logical resistance points or slightly under will not help you either. I don't set my stops until a new logical resistance point is created and then I would move it to the previous logical resistance point. IMO if you are going to set stops they need to be at least 2 times the ATR, prefererably more.
 
Quote from HolyGrail:

The point is if your stop is anywhere close to the market price you better believe you will be stopped out. There is no advantage in giving the market maker a guaranteed market unless you ARE the market maker. Having stops at logical resistance points or slightly under will not help you either. I don't set my stops until a new logical resistance point is created and then I would move it to the previous logical resistance point. IMO if you are going to set stops they need to be at least 2 times the ATR, prefererably more.
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O, but in that case we agree. The point is of course, what do you define as close? 2 times the ATR of a 1-minute bar would be ok with me :).

Anyway, I think any strategy has an exit-point. I don't see the difference between a mental (alerted) one and a real established one. Except of course that the former allows you to reconsider your opinion, which I think is a bad thing.

Ursa..
 
Quote from MajorUrsa:

Except of course that the former allows you to reconsider your opinion, which I think is a bad thing.

Ursa..
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I would agree with you on that one. That is where the discipline is supposed to come in but does not always do so.:D
 
Quote from regulajo:

Can anyone tell me if the MM or Specialist can see trailing stops, therefore taking you out?
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Officially the stops are invisible to anyone. Of course the orders are stored on a server somewhere, either the servers from the exchange/clearing or those from your broker. Trailing stops are mostly handled by the brokers' systems and are invisible to the MM.

Of course rumors go that the MM can see your stops and take them out at will, which are 2 very wild fantasies.
I know the feeling one can have when a stop you just placed is taken out within 5 seconds after which the price goes back again. I had that recently, and was ready to take out all conspiracy theories again..... until I realized that I was running a simulator :(

Btw. you can use ButtonTrader to enter virtual stops that are not sent until the level is triggered. There is a actual stop in place but it is far away (for security). Also trailing stops are handled this way; the deep stop is modified when really needed, ie. the exit reached. Great tool,

Ursa..
 
You don't have to "set" stops. People set them because they can't control themselves.

You get out once the reason of entry is proven wrong.
 
If you buy a stock at 20, and are looking for 22.00, how do you figure out what your chances are of making 2.00 a share.

Same for stops, how do you figure out the chances of it falling a certain amount?
 
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