Stop loss

[deepete]

I had a stop on a share that actually triggered at 3% lower, on Nasdaq today. The broker has said it was a bad trade but Nasdaq will not adjust the trade as more than 30 minutes has passed.

I have had stops that have missed by perhaps 1 or 2 % before but this is the worst, its not as though the stock is in meltdown as it got sold on its lowest of the day so far and bounced back up to my original stop level.

I would appreciate more experianced comments.

 

[Trader333]

Which broker ?
Which stock ?
At what time of day did this happen ?
Were you monitoring T & S and if so what was seen ?


Paul

 

[deepete]

Which broker ?
Which stock ?
At what time of day did this happen ?
Were you monitoring T & S and if so what was seen ?


Paul

IB is the broker.

NKBS opened at 1.71, my stop was at 1.70, it was sold at 1.65 at 15.07 and I was not monitoring the stock due to other commitments.

Peter

 

[garethb]

Looks to me like the bid went down to 1.65 at 3:07:44 and a few trades went through. Not sure why you didn't get stopped at 2:43 or so at 1.70. What triggers your stop? trade, single bid/ask or something else.

 

[deepete]

Looks to me like the bid went down to 1.65 at 3:07:44 and a few trades went through. Not sure why you didn't get stopped at 2:43 or so at 1.70. What triggers your stop? trade, single bid/ask or something else.

I am using IB default setting of double bid/ask, i am open for suggestions on a better method

thanks for your advice and attention

Peter

 

[garethb]

I'm afraid my first comment would be that (for my trading style anyway) you can't expect to trade stocks with such low price and volume without taking some fairly painful slippage in % terms. On most days NKBS barely trades $100,000 worth of stock in a whole day. Having said that your stop order should have been triggered at least when the bid was 1.69.


Stop triggers are tricky, like stop market orders in general. You risk either getting stopped out on the slightest touch or the market tanking but it taking too long for your sell order to get in the queue. You just have to accept the risk of some slip. For what its worth (which isn't much) I use Single Bid/Ask on NASDAQ stocks and Single trade with no better bid/ask on NYSE stocks.


Gareth

 

[deepete]

I'm afraid my first comment would be that (for my trading style anyway) you can't expect to trade stocks with such low price and volume without taking some fairly painful slippage in % terms. On most days NKBS barely trades $100,000 worth of stock in a whole day. Having said that your stop order should have been triggered at least when the bid was 1.69.


Stop triggers are tricky, like stop market orders in general. You risk either getting stopped out on the slightest touch or the market tanking but it taking too long for your sell order to get in the queue. You just have to accept the risk of some slip. For what its worth (which isn't much) I use Single Bid/Ask on NASDAQ stocks and Single trade with no better bid/ask on NYSE stocks.


Gareth

Thanks Gareth,

at other times the stops have been pretty close, its annoying to be caught out when I wasnt around watching. I may try your settings over the next few weeks.

regards

Peter

 

[frugi]

Beware stop trigger methods Pete. The double bid/ask is counterintuitive.

(from IB) >

Last


For a sell (buy) order to be triggered, one last price value must be less than (greater than) or equal to the trigger price.

Double last


For a sell (buy) order to be triggered, two consecutive last price values must be less than (greater than) the trigger price.

Double bid/ask


For a sell (buy) order to be triggered, two consecutive ask price (bid price) values must be less than (greater than) or equal to the trigger price.

I'm looking at the T&S posted by garethb. The first two trades at the bottom appear to be at the bid, 1.70. So, no trigger yet.

The 1st ask at 1.70 appears to be 'confirmed' at 2:44:34, given that the last bids were at 1.69 and then a trade of 2 went thru at 1.70, followed by 8 at 1.69 (coloured red).

Then the ask goes up to 1.71. At 3:07:44 the ask hits 1.70 for the second time, thus triggering the stop. At this point the best bid is 19 @ 1.65 so that is where you were filled.

I used a stop instead of a stop-limit once and it cost me dearly. The manual is tedious in the extreme but worth more than a cursory glance imho.

 

[garethb]

Thanks frugi. I couldn't quite work out why deepete didn't get stopped out sooner. I use tradestation and single/twice/double bid/ask triggers all act on the bid for sell orders and ask for buy orders they have ask/bid triggers if you want it the other way round. It shows it's worth reading the manuals.

Doesn't sound like IB support were helpful at all. "Sorry - bad trade. Can't be bothered to look into it and find out why". Tradestation get some bad press for support but I have always found the trading desk helpful in investigating poor fills and suggesting better routing etc.

Gareth

 

[Trader333]

I did a number of tests with IB a couple of years ago and using stops with IB was much worse than using market orders to close a trade in terms of slippage and this was on stocks with good volume.


Paul

 

[TheBramble]

I did a number of tests with IB a couple of years ago and using stops with IB was much worse than using market orders to close a trade in terms of slippage and this was on stocks with good volume.

Paul, did you query IB over this anomaly? The technical implementation of both should be identical on their side of the platform. Any difference in their implementation, unless it is a technically different implementation, should give cause for some concern.

We have an IB bod as a member on these boards. Perhaps they could comment too?

 

[deepete]

I did a number of tests with IB a couple of years ago and using stops with IB was much worse than using market orders to close a trade in terms of slippage and this was on stocks with good volume.


Paul

Thats not good news for me as I`m using bracket orders that take care of most of my selling as I have to go to work and earn a living, that is until i improve substantially on my share dealing.

Peter

 

[deepete]

Beware stop trigger methods Pete. The double bid/ask is counterintuitive.

(from IB) >




I'm looking at the T&S posted by garethb. The first two trades at the bottom appear to be at the bid, 1.70. So, no trigger yet.
.

Could you tell me where to get the T&S info from, is it available on the IB workstation as I havent come across it yet.

regards
Peter

 

[Trader333]

Tony,

This was a couple of years ago and things may have changed since then and I didnt follow it up as I decided not to use stop orders.

Peter,

If you use a package such as Quotetracker you are able to use multiple datafeeds including IB which would then allow the viewing of T&S data quite easily.


Paul

 

[deepete]

I had very bad slippage again today on IB.

Had a stop on EVOL overnight to lock in some profits at 2.40, the stock had closed at 2.45 the previous day.

It was triggered at 15.10 hrs yesterday at 2.34 which made a serious dent in my profits. I have been reading the recent posts on stop loss and have found it useful but the slippage on a stop can make a serious difference. I was hoping to cover both a continuation of the stock rising or taking the profit and coming back at a lower price.It actually sold at its lowest of its range of the day and closed at 2.35

I am still using the double bid/ask as it seemed most suitable with bracket orders, but i am now seriously reconsidering what will work best for my trading style.

 

[garethb]

Deepete,

I think you are going to struggle with automated stop losses on low price stocks with low volume like EVOL. Day before yesterday EVOL had a range of about 10% from high to low. I don't watch the stock and haven't pulled up the T&S but I'm guessing the bid offer spread often sits at 2% or more of the stocks value. If your stop trigger is on bid/ask as IB define it you are bound to lose at least the spread in slippage even if your order doesn't move the market.

EVOL only traded 72,000 shares yesterday. I don't know how big your position was but ask yourself how much of the total day's volume you were trying to put through in a single order. Would someone expect to put in an order for $40 million worth of Google without moving the market? Probably no, yet in % of daily value traded that is about equivalent to $2000 worth of EVOL.

Even without stop loss orders you can't easily get into and out of positions in such stocks without big slippage in % terms. If you want to trade these stocks for their huge % potential you have to accept wide stops. It's also not really possible to trade out as it falls and trade back into a position at a lower price expecting to catch 5c advantage. These stocks will tend to move in 2% plus jumps and any amount of volume will move the price away from you.

Best of Luck

Gareth

 

[deepete]

Summed up nicely Gareth, good point taken on board, but the offer bid spread has been much tighter than that as the norm.

thanks