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How can your stop be protected in proper money management steps.
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How can your stop be protected in proper money management steps.

  #1 (permalink)
Elite Member
New Orleans Louisiana
 
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How can your stop be protected in proper money management steps.

Has anyone had all there plans in place when making a trade. entry, stop, profit. In a quick move my stop got taken out 55 ticks higher instead of 5 ticks, has this happened to anyone else before.

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  #2 (permalink)
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  #3 (permalink)
Market Wizard
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Slippage



bmw421 View Post
Has anyone had all there plans in place when making a trade. entry, stop, profit. In a quick move my stop got taken out 55 ticks higher instead of 5 ticks, has this happened to anyone else before.

Slippage is quite normal at news times:
https://futures.io/traders-hideout/31332-market-closure-due-volatility.html#post402547

Standard example: yesterday's GDP data.


Last edited by choke35; December 24th, 2014 at 12:28 PM.
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  #4 (permalink)
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This is called slippage and happens essentially because you have used a stop market order.
What this means, is that when your stop price is reached, your dormant order becomes a market order and thus fills at whatever price the market is offering. As you said, in a quick move you could loose several ticks from the time your order wakes up from dormant state to become a market order, and the time it then gets filled at market.

You can experiment with another type of stop orders, and these are stop limit orders.
In this type of orders you have to specify two prices:
1. one for the stop price as before, and this is the price at which your order wakes up and become active on the exchange
2. the second price is the limit price, and this is the price you want to be filled as if you had placed a limit order in the first place. So your order will only be executed if get your desired limit price.

This type of order however could reveal to be very dangerous, as you might never get stopped out in some cases where the price never goes back down to your limit order as it shoots past your stop...

So be careful and account for slippage in your trading systems, and risk management plans.
Some instruments are deeper than others and provide less slippage on average versus others, so do your homework properly

Cheers
Fadi

Successful people will do what unsuccessful people won't or can't do!
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  #5 (permalink)
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bmw421 View Post
Has anyone had all there plans in place when making a trade. entry, stop, profit. In a quick move my stop got taken out 55 ticks higher instead of 5 ticks, has this happened to anyone else before.

While I have certainly had slippage, it has never been as bad as 55 ticks. what market were you in? was it front month?

I always(try to use) STOP MARKET, but found NT7 had STOP LIMIT as a default. I was never burned by it however

Trade liquid markets.
Factor in slippage due to adverse reaction to government our inventory reports in your analysis of risk
(don't trade on a50-50 chance of a big move. you need better odds than that. )
I do trade the bonds on the NFP report but do try to manage my risk. I'm not saying I do a Monty Carlo analysis. but I do look at bes, worst, and likely case scenarios

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  #6 (permalink)
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Fadi View Post
This is called slippage and happens essentially because you have used a stop market order.
What this means, is that when your stop price is reached, your dormant order becomes a market order and thus fills at whatever price the market is offering. As you said, in a quick move you could loose several ticks from the time your order wakes up from dormant state to become a market order, and the time it then gets filled at market.

You can experiment with another type of stop orders, and these are stop limit orders.
In this type of orders you have to specify two prices:
1. one for the stop price as before, and this is the price at which your order wakes up and become active on the exchange
2. the second price is the limit price, and this is the price you want to be filled as if you had placed a limit order in the first place. So your order will only be executed if get your desired limit price.

This type of order however could reveal to be very dangerous, as you might never get stopped out in some cases where the price never goes back down to your limit order as it shoots past your stop...

So be careful and account for slippage in your trading systems, and risk management plans.
Some instruments are deeper than others and provide less slippage on average versus others, so do your homework properly

Cheers
Fadi

awesome. very good answwer
slippage is NOT avoidable, but is more at news, mkt open etc

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  #7 (permalink)
Trading for Fun
Hungary
 
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bmw421 View Post
Has anyone had all there plans in place when making a trade. entry, stop, profit. In a quick move my stop got taken out 55 ticks higher instead of 5 ticks, has this happened to anyone else before.

use a second account and add an opposite position where you would have placed the stop on the first... #crazyAsItIs be your own goldman and hedge against yourself.

personally i would just go with smaller positionsize on those markets /periods whatever. risk supposed to be the only thing which is under the trader's control. if risk is not cmpletely under my control.. then what else is?

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