stops based on "market" - Finspreads

Ok, I've been trading the Dow Jones with Finspreads on an end of day basis for a while now, and I've recently started using "Market" stop losses instead of stops based on "Our Quote", although something has recently happened to make me start to wonder if I have misunderstood the meaning of market stops.

I thought that the "market" price was what you get if you check the quote on BigCharts or similar, so rather than have to worry about how much higher the June contract is trading at, I base my stops on the EOD charts and place a market stop. Although yesterday I got stopped out much lower than I had intended using this method, so I'm starting to wonder if I have got the wrong idea.

Can anyone clarify?

Can you specify which market you are speculating on with fins?

Steve.

Wall Street - June (in this case)

kool4caats said:

Wall Street - June (in this case)

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So one imagines that your stop will be triggered when the real market trades through your stop level. The stop on your account may show as a slightly different level as fins obviously add a spread to the real market which normally trades with a 1 point spread.

Hope this helps,
Steve.

kool4caats said:

Ok, I've been trading the Dow Jones with Finspreads on an end of day basis for a while now, and I've recently started using "Market" stop losses instead of stops based on "Our Quote", although something has recently happened to make me start to wonder if I have misunderstood the meaning of market stops.

I thought that the "market" price was what you get if you check the quote on BigCharts or similar, so rather than have to worry about how much higher the June contract is trading at, I base my stops on the EOD charts and place a market stop. Although yesterday I got stopped out much lower than I had intended using this method, so I'm starting to wonder if I have got the wrong idea.

Can anyone clarify?

Click to expand...

I'm not sure I full understand. Are you sure you are not confusing the Futures Index quotes with the Cash index? I ask because you say

"rather than have to worry about how much higher the June contract is trading at"

Click to expand...

How much higher than what? Why would that make a difference?

I think he means that he does not want to worry about getting stopped on their spread, which may be biased, when the market trade may not get touched. However, although you can opt to close at the market stop you will, still, only get paid according to their spread at the time and that will probably be a worse price than by using "their price".

The best option is to try not to get stopped.

How about closing orders at a profit, though? I'm not sure what is the best for that.

Split

Ok... I'll try to explain.

I do all my calculations, i.e where to put my stops, based on data that I download from Paritech on the Dow Jones, which is presumably what is defined as the 'market' prices.

I then open a position with one of the Wall Street Futures - Jun, Sept, Dec, March usually offer stops based on the 'market' value, so instead of having to work out where the support (or resistance) would lie on the Future in question, I can just use the value from my charts - This is not only easier and means there is less room for miscalculation, plus there is no chance that Finspreads can influence their quotes to take out stops.

On Wednesday last week, I opened a long position on the Dow, and put my stop at 13510, based on market. Strangely I didn't get stopped out on Wednesday, although I thought I should have done. On Thursday, it went even lower and at the end of the day I found that my stop had been triggered at 13512 (June Future Quote). As the June Future was trading at about 25 points higher than the market, this means that I was stopped out 23 points below what I should have been. I'm just wondering whether Fins have ripped me off here, or whether I am misunderstanding what the 'market' price is.

The SB definition of this & terms used is misleading. It makes you think you will get stopped out at the market price, when the market trades there. This is not so.

What "our quote" means, is when the SB quote hits the specified level.

"Market" means whatever the SB co. are quoting at the moment the market is at your specified level, this does not mean you will get an exit at a specified price, when the market is trading at this specified price, and does not mean that you are trading on prices any closer to the real market.

Therefore the actual real difference between the "our quote" & "market" may be minimal - you are still trading on the SB quote .

It is a misleading definition in some ways IMO.

kool4caats

I think you got mixed up a little. this is how i read what you done. You went long Wall Street Future June and based your stop at market...Now you only get stopped out if underling instrument you are trading in this case the Wall Street Future June, hits your stop based on market price. Market price means the underlining markets you are trading.

I think you are basing you stopon the Dow Cash. you cant trade the Wall Street Future June and base you stop on the dow cash market.

Market stops means if the Wall Street Future June traded at that price. Further if you use Market stops Fins will also add a 4pip spread to your stop.

Is this what you are trying to say?

kool4caats said:

Ok... I'll try to explain.

I do all my calculations, i.e where to put my stops, based on data that I download from Paritech on the Dow Jones, which is presumably what is defined as the 'market' prices.

I then open a position with one of the Wall Street Futures - Jun, Sept, Dec, March usually offer stops based on the 'market' value, so instead of having to work out where the support (or resistance) would lie on the Future in question, I can just use the value from my charts - This is not only easier and means there is less room for miscalculation, plus there is no chance that Finspreads can influence their quotes to take out stops.

On Wednesday last week, I opened a long position on the Dow, and put my stop at 13510, based on market. Strangely I didn't get stopped out on Wednesday, although I thought I should have done. On Thursday, it went even lower and at the end of the day I found that my stop had been triggered at 13512 (June Future Quote). As the June Future was trading at about 25 points higher than the market, this means that I was stopped out 23 points below what I should have been. I'm just wondering whether Fins have ripped me off here, or whether I am misunderstanding what the 'market' price is.

Click to expand...

A futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. The underlying instrument for a Futures index is the Cash index. The futures price is sold at a premium above the cash index and normally converges towards it as it approaches expiry. Market price IS NOT the price of the Cash index! Make sure the chart you download is for the instrument you are trading. ie/ Cash or Futures, once again, they are 2 different instruments. The cash index is not the market price.


In any instrument you trade there are normally 3 quoted prices.

1) BID - The highest price someone is willing to buy an instrument
2) ASK/Offer - The lowest price someone is willing to sell an instrument
3) LAST Price - The last price an instrument traded at.

The spread is the difference between the BID and ASK price.

Using the ES futures contract as an example, the spread is normally 0.25 points.

If the last price traded at 1520.00 and was taken at the Bid (and there were more buyers at that price) then the quotes would look like this:

BID: 1520.00 ASK: 1520.25 LAST:1520.00


A trade taken "at the market" will depend on which side you are taking the trade. if you BUY at market you will pay the lowest ASK price, 1520.25. If you SELL at market, you will get the highest BID price, 1520.00. Assuming you bought at market, the last price will reflect this:

BID: 1520.00 ASK: 1520.25 LAST:1520.25


Once again, I think you are confusing the market price with the cash index price. On a final note: I trade with a direct access broker and with IGindex spread betting. I don't see any major difference between their quotes on the S&P500 futures and the ES contract. I don't believe SB companies manipulate price to take out stops, I certainly don't see any evidence of it.

Thanks for the replies, guys.

What you're saying does make sense, so I'm glad I asked on here first before I complained to Finspreads

It's great to have so many people willing to help on my first post :cheesy:

This 'market price' idea has always confused me, and I think the term's definition varies between SB cos. Someone from Fatspreads once tried to explain it to me, but I was even more confused after that. For one thing, how can it be a market price if they quote when the markets are closed?