Slippage and Direct Access Brokers

N

newt raider

In a fast trading market, what kind of slippage do you get on ES stops? (Would've been better to ask this after yesterday's fed news, or lack therof). Also, if you're trading through a direct access broker (like IB), do they give you some kind of limit as to how many contracts you can trade (for margin requirements), or does the system have to stop and check your margin for each trade and slow you down in the intraday?

Looking to go live for the first time sep 10, and just want to clear up some questions that paper trading can't answer.

thanks
 
Quote from newt raider:

do they give you some kind of limit as to how many contracts you can trade (for margin requirements), or does the system have to stop and check your margin for each trade and slow you down in the intraday?

If you are worried about broker limits and checking available margin, you are WAY WAY overleveraged.

People are attracted to things like $300 or $500 daytrading margin.

This kind of thinking will put you out of the game. It only takes one trade that somehow you lost track of to quickly extinguish your trading capital.

From past research I have read, it seems that trading at about 7:1 leverage on your trading capital is optimal for Risk:Reward. Don't go much beyond this if you want to live.

 
Thanks for the reply. I think I should be ok with the margin, I was more worried about the automatic calculations that might slow down trading, but I would assume that the direct access brokers must keep some running tally of the net liquidity, and stop you immediately if your sizes are too big (ie there is not enough to meet initial margin and open the trade). I guess a better way to have asked the question is to say what is the difference between a web based discount broker checking your margin (slow) vs a direct access broker checking the margin (fast), knowing that every trade needs to be checked before it can be executed.

Its funny that you mention the forgotten trades, because this has happened to me once or twice over the past couple months of paper trading. As far as risk mgmt goes, I always open a position long or short 2, then close 1 after BB+ or BB- exceeded by .5 pt (in the right direction), or eat a max 1 pt loss hopefully(2pts overall), or add another 2 if the move is confirmed in the short term, then continuing to add 2 when the move is tested, and flushing everything out usually with profit when the move is over. The long and short of it is I frequently end up with 3 or 5 open positions on small moves and a couple times have only closed 2 or 4, but I would hope the account screen would keep track of my open positions for me.

I appreciate your comments.
 
I usually just get 1 tick of slippage unless there is a major event happening. I use LIMIT for entry so that evens things up a bit.

Geoff
=====
aka Cajun Sniper
Trader/Administrator http://PureTick.com

Quote from newt raider:

In a fast trading market, what kind of slippage do you get on ES stops? (Would've been better to ask this after yesterday's fed news, or lack therof). Also, if you're trading through a direct access broker (like IB), do they give you some kind of limit as to how many contracts you can trade (for margin requirements), or does the system have to stop and check your margin for each trade and slow you down in the intraday?

Looking to go live for the first time sep 10, and just want to clear up some questions that paper trading can't answer.

thanks
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