Trailing Stops
- Thread starter Trend Fader
- Start date
breakout, You don't place a hard stop to protect against system failure? I do, but sometimes I wonder if it is not costing me more in the long run. I like to use 2 handle stops on es. Sometimes I can see the trade is falling apart but I hang on because the stop which was supposed to be in there to protect me in case the system goes down is already there, so I just let it stand.
Hi Breakout
Thanks for sharing that with us. I am curious how you manage to use a typical trailing stop of only 6 ticks. This appears to be close to the "average" bar length on the ES 1 min chart so I would expect to get stopped out very frequently with such a tight stop.
Could you also share with us your entry setup?
spike
Thanks for sharing that with us. I am curious how you manage to use a typical trailing stop of only 6 ticks. This appears to be close to the "average" bar length on the ES 1 min chart so I would expect to get stopped out very frequently with such a tight stop.
Could you also share with us your entry setup?
spike
Trailing stops is an incredibly diffiuclt art to master I think. On of our top traders use a flat 30 cetns stop loss from where he bought the stock..ALWAYS. No questions asked no matter what stock he is trading. (He trades multiple positions at once like..30 to 100 - dont ask me how). And this guy is a h monster trader. It works for him. Perhaps he only picks stocks that wont have too much volatility to take him out with more than 30 cetn gaps for the most part...I dont know.
One thing i have noticed on listed stocks is that many times, the sepcialists will "come down to get me". Take a stock like SPW which trades over 1M shares a day. If I have my 1000 shares stopped $1 below, and there isn't THAT much buying pressure but slowly trending up, I swear to God - he comes down to trigger my stop with 100 shares, take my 1000 and then continue to rip up. My 1000 was the low of that move. This happens often enough (and perfect # of shares - 100 to trigger, my 1000...and that's it!) for me to know that it is not just a pure conincidence. In order to avoid this, either you have to use mental trailing stops or have a execution system that allows for "invisible" stops.
One thing i have noticed on listed stocks is that many times, the sepcialists will "come down to get me". Take a stock like SPW which trades over 1M shares a day. If I have my 1000 shares stopped $1 below, and there isn't THAT much buying pressure but slowly trending up, I swear to God - he comes down to trigger my stop with 100 shares, take my 1000 and then continue to rip up. My 1000 was the low of that move. This happens often enough (and perfect # of shares - 100 to trigger, my 1000...and that's it!) for me to know that it is not just a pure conincidence. In order to avoid this, either you have to use mental trailing stops or have a execution system that allows for "invisible" stops.
amazing how efficient specialists are in doing this. Here is finally a possible advantage of trading with some prop firms. I don't know all the mechanics of how stops are handled with each clearing firm, or trading firm, but I do know that certain prop firms hold their stops "in house" and this prevents orders from showing on the floor. I have been told that this provides some degree of safety in that the specialists do not see the stop orders until they are triggered within the firm with whom you are trading.
Now I can see a downside to this as well. That being that perhaps the order is delayed compared to orders held by specialists just because of time priority. So there is no guarantee that one way is better than another. Just that there are different ways to handle stops.
Personally, I seldom use stops (other than mental). I have used trailing stops in profitable positions if I leave the office. More times than not, I would have been better off just closing the positions. Again, this is a "beginners luck" curse for me. First time I tried it, it worked great. Came close to maximizing my profit, and all this while playing golf. But then becoming a "believer" cost me in the end. Thought I found an easy play. As always, there really is no such thing. Hence, I rarely use stops of any kind. Less golf, more work. Such a shame!!!!
nx = direct plus orders
I trade only NYSE stocks so these are the only ones I know about. Here is how it works: If the specialist is showing more than 1 lot offered or bid you can buy or sell on that bid or offer at the size how (up to 1000 shares). This happens without the specialist ever getting the order and deciding what he wants to do with it.
So if the tape is
40.15 40.25 5*12
I can nx to sell 500 shares at the bid or to buy up to 1000 shares on the offer.
If you do not have this you tend to miss that fill, miss the next fill and you get a worse fill.
I trade only NYSE stocks so these are the only ones I know about. Here is how it works: If the specialist is showing more than 1 lot offered or bid you can buy or sell on that bid or offer at the size how (up to 1000 shares). This happens without the specialist ever getting the order and deciding what he wants to do with it.
So if the tape is
40.15 40.25 5*12
I can nx to sell 500 shares at the bid or to buy up to 1000 shares on the offer.
If you do not have this you tend to miss that fill, miss the next fill and you get a worse fill.