Why stops are going off early ??

[Spamula]

I'm having a few problem with stops. Not sure if I'm entering correct orders, say if I'm short ebay at $12.10 and I immediately enter a stop at 12.25 risking 0.15 what would be the order for this. Simply market stop/price/ day? My stops seem to go off early when stop price not touched any idea.

Also what would it be for long at 12.10 with a stop 11.95 if touched.

 

[UKtradergirl]

I'm having a few problem with stops. Not sure if I'm entering correct orders, say if I'm short ebay at $12.10 and I immediately enter a stop at 12.25 risking 0.15 what would be the order for this. Simply market stop/price/ day? My stops seem to go off early when stop price not touched any idea.

Also what would it be for long at 12.10 with a stop 11.95 if touched.

I wrote something about this just recently here:

http://www.trade2win.com/boards/567532-post13.html

You need to be very careful with stop placement. Stops are usually based on the quotes, not the price that the market has reached, for reasons which i detailed in the post i link to. (basically, if your stop was taken out when the market price reached the stop level, you would lose more money as the trade would be closed at the spread quoted, not at the market price level).

 

[Spamula]

Anyway round that Trade Girl?

 

[UKtradergirl]

Anyway round that Trade Girl?

Place a bigger stop?

It depends on the spread. If the spread is 80-90 (10 points), then add 5 points on to your stoploss point. Simply, just add half of the spread on to your stoploss.

So, in the above example, if you are were long in the market and you wanted to be stopped out at market price = 90 then you need to place your stop at 85.

This is not guaranteed by the way, as in practise the spread is sometimes skewed compared to the market, but that's a whole other story!

 

[UKtradergirl]

Just wanted to add-

I think some people will complain that their stop has to be bigger, but in actual fact just remember you are factoring in the 'commission' that the company is charging you for placing that trade. In spreadbetting it happens to be incorporated into the spread, if you were dealing through a broker for shares you would pay a fixed amount instead. Same thing- just the Spreadbetting kind takes a little more thought for stop placing.

 

[Spamula]

I'm using lightspeed trading platform for equities, thanks for your help

 

[Carloss]

Spamula, do running stats on what your stop needs to be for your target to be hit, then eliminate the big losers and work from there, the stats could be a rolling 5 days

 

[mazarebacha]

Only i say, be careful with your stops. Good luck!!!!

 

[TomTom]

The stops need to take into account for noise and a % whip movement.
At the same time one has to give a cirtain leavel of time for the trade to matierialise.

When trading stocks, the overhaull index rising would indicate if your on a winner/looser.

 

[new_trader]

I wrote something about this just recently here:

http://www.trade2win.com/boards/567532-post13.html

You need to be very careful with stop placement. Stops are usually based on the quotes, not the price that the market has reached, for reasons which i detailed in the post i link to. (basically, if your stop was taken out when the market price reached the stop level, you would lose more money as the trade would be closed at the spread quoted, not at the market price level).

Uktradergirl, I don't know what you mean by "based on the quotes, not the price that the market has reached". The quotes combined form the current market price, that is the bid and ask price combined form the market price. The last price is history, it is the last trade that has been executed and is not the market price. Whatever the spread is now is the market price. If you buy@market now you will pay the current ask price, if sell@market now you will pay the current bid price.

 

[UKtradergirl]

I was speaking simplistically to illustrate a point. The spread at a SB company is wider than that at the market on accout of their commissions. I was trying to show that the price will be executed at their quote rather than the market one. I'm not going to get into a tit-for-tat on minor issues- my point still stands as i stated- if you want to be closed out at a certain point you have to take account of the spread, market spread, spreadbet company spread, or otherwise.

 

[new_trader]

I was speaking simplistically to illustrate a point. The spread at a SB company is wider than that at the market on accout of their commissions. I was trying to show that the price will be executed at their quote rather than the market one. I'm not going to get into a tit-for-tat on minor issues- my point still stands as i stated- if you want to be closed out at a certain point you have to take account of the spread, market spread, spreadbet company spread, or otherwise.

If you trade with a S/B company, their bid and ask combined form their market price. Why would you use a different market price if trading with a S/B firm? The OP claimed his STOP was being hit when it appeared the price didn't move anywhere near it. If his STOP was hit it means for that fraction of a second it was the market price. There are a staggering number of trades taking place within a second and sometimes price moves so quickly that it appears to have not gone near the stop price when it has, if for only a small moment in time.

 

[UKtradergirl]

yeah i know the spread from markets combine with those of SB to form their quote. Hence my point still stands- to get the desired effect just add a couple of points to your stop (or half of whatever the spread is).

i've made my point here and will not keep repeating it, if you don't get it you don't get it, hehe.

 

[new_trader]

yeah i know the spread from markets combine with those of SB to form their quote. Hence my point still stands- to get the desired effect just add a couple of points to your stop (or half of whatever the spread is).

i've made my point here and will not keep repeating it, if you don't get it you don't get it, hehe.

Exactly, you've made your point!

As for whatever 'desired effect' means is anyones guess

I didn't say that the market spread combines with those of the SB, I said the BID and ASK combined form the market price.

I couldn't see anywhere in the original post where the word Spread Betting or S/B or SB appears...maybe you can point it out to me? I did however read that the OP trades with Lightspeed trading which to me looks DMA. But as long as YOUR point (whatever it is) still stands is all that matters.

 

[UKtradergirl]

:clap:

 

[Ponce]

I'm having a few problem with stops. Not sure if I'm entering correct orders, say if I'm short ebay at $12.10 and I immediately enter a stop at 12.25 risking 0.15 what would be the order for this. Simply market stop/price/ day? My stops seem to go off early when stop price not touched any idea.

Also what would it be for long at 12.10 with a stop 11.95 if touched.

Greetings,

Let me try and answer your question a bit different.Since you sold EBAY 12.10,what is your intended target? Consider a 5-1 r/r ,with 4% risk. .48 risked targeting 9.70 price will have you green over the long haul.The 4% risk with a .25 prob. translates to .5 math and a kelly value of .1 ! A .15 stop on 12.10 is barely 1% risk,which will have a higher losing probability,and require a higher w/l.Hope that helps.

cordially Ponce,

(The quote of E. Hubbard is opinion stated as knowledge.)

 

[new_trader]

System people

 

[Ponce]

Greetings,
Yes I do predefine my risk and target on every trade,why anyone would randomly trade and expect consistent results baffles me.
cordially Ponce

 

[new_trader]

Greetings,

Do you drive a car? If so, I imagine that whenever you do get in your car to drive somewhere you have a predefined destination. I was wondering if everytime you drive, you calculate the risk of having an accident on that route for that particular journey based on historical data and performance. If so, does that influence your decision to wear a seat belt?

If the journey takes 1 hr do you leave 30 minutes early, drive in the opposite direction for 15 minutes before doing a U-turn and driving in the right direction or do you leave on time and head in the correct direction right from the start?

 

[gamma]

Greetings,

Do you drive a car? If so, I imagine that whenever you do get in your car to drive somewhere you have a predefined destination. I was wondering if everytime you drive, you calculate the risk of having an accident on that route for that particular journey based on historical data and performance. If so, does that influence your decision to wear a seat belt?

If the journey takes 1 hr do you leave 30 minutes early, drive in the opposite direction for 15 minutes before doing a U-turn and driving in the right direction or do you leave on time and head in the correct direction right from the start?

Says I can't rep you.
But I want to say "Excellent post"