|
PureBytes Links
Trading Reference Links
|
In a message dated 2/11/00 4:26:38 PM Central Standard Time,
comdytrd@xxxxxxxxxxxxx writes:
<< Additionally, of course, always use stops with limits.. Most do on globex
and the few who didn't this time (only a few contracts traded), not only
ruined their weekends but our charts as well.
I did speak with one lucky guy whose sell order some 60 points above the
market was hit. It's not always locals who get the "plums"...this one
fellow is a happy camper, but again, not a good situation.
Michael >>
****** Most nearly all stops on Globex are stop limits. I am not aware of
any firm that has their stops set to full-throttle, get me a price no matter
what, because of situations just like this. Stop limits can be directly sent
to Globex2, with the limit defined. Stops routing through TOPS in many cases
go to a special Order Manager server for holding and executing orders. But
most all firms have stops set as stop limit orders. My FCM uses 4 points in
the mini Nasdaq and 2 points in the mini S&P.
****** I think we are missing the point here on what happened today. Yes,
there was a spike. But most of the time when we have had spikes like this
before it was because of some anticipated event and everyone was hitting the
enter button at the same time after some news announcement. This was a case
of stops being run in a domino effect. There simply was not enough limit
orders to control the buying and stops kept running into and electing more
and more stops.
****** I saw more and more people write yesterday about the disconnection of
reality between the Nasdaq and the real world. There are plenty of bears in
the woods and they came out today and they all had stops above the market.
Now maybe enough traders got burned today that they will cease using stops.
I don't think so. But maybe they stop using stops so far away from the
market. Those are the events that cannot be retrieved.
****** There is opportunity here. I have a client who follows some system in
the Nasdaq. He is always calling me too late to get the trade on a stop, so
I tell him to put in a limit at what would have been a stop entrance. We
have gotten filled every single time on the limits. The volatility and
illiquidity can work to your favor if you use it right. I suggested to a few
people that they should view the mini Nasdaq in a 1 minute bollinger band
with 2 standard deviations. Try to enter the market upon getting a signal at
the counter end of the band. It might just work, or something similar.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
Disclosure: John J. Lothian is the President of the Electronic Trading
Division of The Price Futures Group, Inc., an Introducing Broker.
|