"Human Stop Losss" vs. Computerized

R

Rsagi

Newbie
Messages
8
Likes
0
Hi all,

I am currently day trading the QLD/QID. I use a "human stop- loss" so I bail out of a trade if it goes south relatively quick by selling the stock my self vs. employing an automatic stop-loss /limit

I was wondering if hypothetically I would lose less money if I used a computerized stop-loss ? I know that some people would probably say that I would because it would keep me from making emotional mistakes by holding the position longer believing it would reverse - but I'm referring to the underlying "mechanics" of the process. (if computerized - are the stop loss order kept on the brokers server and executed faster vs. me hitting the keyboard etc?)

Best,
Steve
 
Actually... I think that a human stop loss is better... as you are able to see each move's limits... When I use a predefined value I get stopped out too early or I lose too much. When I simply use the previous low/high as a stop loss I get stopped out fewer times...

But I am relatively new to this... so others will probably have more experience.
 
Rsagi said:
Hi all,

I am currently day trading the QLD/QID. I use a "human stop- loss" so I bail out of a trade if it goes south relatively quick by selling the stock my self vs. employing an automatic stop-loss /limit

I was wondering if hypothetically I would lose less money if I used a computerized stop-loss ? I know that some people would probably say that I would because it would keep me from making emotional mistakes by holding the position longer believing it would reverse - but I'm referring to the underlying "mechanics" of the process. (if computerized - are the stop loss order kept on the brokers server and executed faster vs. me hitting the keyboard etc?)

Best,
Steve
Click to expand...

I suppose what you are asking is whether you should keep a mental stop or place a stop order in the market?

IMO: This is mostly a question of discipline, experience and ego! I would say that a newbie must always place a stop order in the market when they open a position. It takes a few years and 100's of trades worth of practice and experience before anyone is truly ready to trade with mental stops.
 
Thanks fort he reply's. I was more referring though the "mechanisms" of the trade, meaning - If I manually terminate the position vs. having a "computerized stop" - would I earn an extra microsecond that can save me money since the order is already on the brokers server (which in my case -using TradeStation I'm assuming its on my PC ... and sent to the server once triggered).

Hope this helps clarify things up.

best,
Steve
 
Rsagi said:
Thanks fort he reply's. I was more referring though the "mechanisms" of the trade, meaning - If I manually terminate the position vs. having a "computerized stop" - would I earn an extra microsecond that can save me money since the order is already on the brokers server (which in my case -using TradeStation I'm assuming its on my PC ... and sent to the server once triggered).

Hope this helps clarify things up.

best,
Steve
Click to expand...

As the above post states one should always place a stop at the same time as the order is placed (and target for that matter) otherwise human emotion will will cause a premature exit or worse still indecision will lead to a worse loss than anticipated.

There are three basic components of a trade.
Where to enter
Where to exit
Where to place the stop.

IMO If these three criteria are not a 100% certainty in the trader's mind then the trade should not be taken.
 
Rsagi said:
Thanks fort he reply's. I was more referring though the "mechanisms" of the trade, meaning - If I manually terminate the position vs. having a "computerized stop" - would I earn an extra microsecond that can save me money since the order is already on the brokers server (which in my case -using TradeStation I'm assuming its on my PC ... and sent to the server once triggered).

Hope this helps clarify things up.

best,
Steve
Click to expand...

Steve,

Read my post again, 3 times, then another time, then again, then again. Then read Rols' post 3 times, then another time, then again, then again. Then read them both again. Then, read them again. ok? Then, before "clarifying" your question again, read my post again, then another time, then again, then again. Then read Rols' post 3 times, then another time, then again, then again. Then read them both again. Then, read them again. By this time, you won't need to clarify your question again. Good trading to you.
 
One thing more...

Computers can and will crash...

So unless you have a back-up in place, or have your brokers phone number handy, and don't mind if their security checks take awhile - whats your aunts maiden name, quickly quickly, while your market chooses just then to spike or tank, lol -, then I'd think twice about mental stops.

OK, at some point when you're big enough you probably won't want to advertise your stops any more by putting them into a transparent system, but until then...
 
Consider the difference between stop loss and risk taken: they needn't be the same thing.
 
Steve,

Whilst I agree with what has been said in this thread, I think it obvious from the responses that you would have better luck getting an answer to the question you actually asked, rather than the one people think you should have asked, from your broker.

If I had to guess, I'd say that simply by the fact that a computers' reflexes will always be quicker than your own, a "computerised" stop loss would be quicker. By this I mean when price touches your stop point, the computer is likely to initiate the stop order quicker than any mere human would be able to react and click the button to stop out. If you are worried about a few micro seconds then a computerised stop loss would likely be preferable.

Cheers,
PKFFW
 
Yes, so you have your answer now! A computerised stop might be preferable because it is likely to initiate a stop order quicker. Does this change anything? What if it wasn't quicker? What if the broker says "No, a human stop is much quicker" Would you still ignore all the advice about keeping mental stops?

Just wondering...:rolleyes:

Computers don't have an ego, nor do they experience fear or greed or any other of the things that impair a trader's ability to act when they must.
 
new_trader said:
Yes, so you have your answer now! A computerised stop might be preferable because it is likely to initiate a stop order quicker. Does this change anything? What if it wasn't quicker? What if the broker says "No, a human stop is much quicker" Would you still ignore all the advice about keeping mental stops?

Just wondering...:rolleyes:

Computers don't have an ego, nor do they experience fear or greed or any other of the things that impair a trader's ability to act when they must.
Click to expand...
Hence why I said I agree with what had been posted in the thread.

However, the devil is in the detail. Surely someone who "neglects nothing" when it comes to trading would agree with that?

Steve asked a specific question which your reply did not actually address. Hence my advice to speak with his broker regarding where his computerised stop order would be kept and which would be actioned quicker etc.

Cheers,
PKFFW
 
PKFFW - Thanks for addressing the specific question - much appreciated.

Thanks to everyone else for participating in this thread.

Steve
 
Rsagi said:
PKFFW - Thanks for addressing the specific question - much appreciated.

Thanks to everyone else for participating in this thread.

Steve
Click to expand...

Steve,

Your question isn't logical, sorry to say. Despite some who think they have addressed it.

You have 2 choices about a stop when you open an order.

1) Send the Stop with the opening order
2) Keep the stop inside your head

Irrespective of how quickly your broker can execute an order, nothing will happen until it has made the transition from your head to the 'send' button. Do you understand?

Once you have sent the order, any delay between you deciding to send it and actually sending it is removed from the equation.

I can answer your question. Server side orders will be executed faster than client side orders, that is unbelievably obvious isn't it?

If you keep mental stops that is just another delay being added.
 
for scalping, human stops are always preferable, in my opinion. i find that market markers will purposely test a new price with 1 lot to get the stops out or vicious spikes will get stops out. For swing trading and position trading where u dont have to constantly look at every tick movement, then a computer stop is mandatory and a few ticks difference wont make a huge difference since u r looking to take a much longer term view than scalping.
 
You must log in or register to reply here.

Similar threads

T
  • Article
Commodities Indices Computerised Commodity Trading
Replies
0
Views
3K
T2W Bot
T2W Bot
T
Triggered Order execution? Or Automatic stop setup
Replies
2
Views
2K
shjm
S
O
IB Stops on Exchange + CME Stops
Replies
10
Views
5K
A Dashing Blade
A Dashing Blade
J
Trade Size, Stops and Volatility....
2 3
Replies
51
Views
11K
ForceBeWithYou
F
T
Secret Trading Tip #15 : Trailing Stops
Replies
0
Views
2K
traderkenny
T
Top