What's New at netwealth Share Trading?

[burglar]

What's New

Introducing Trailing Stop Conditional Orders

Our new Trailing Sell and Trailing Buy Conditional Order types have arrived and are designed to complement our existing four order types. The new conditional orders can help you lock in trading strategies and optimise your trading outcomes.

Yay!

 

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Yay!

Wowee! The Inventors of the Wheel!

15 years ago, a broker I was with at the time (and who should better remain unidentified) offered such conditional orders. I thought, give it a try - certainly helps maintaining trading discipline. And that's a good thing, right?

Well, it would've been a good thing for me, had it not become a much better thing for that broker:
Knowing where his clients had placed the stop, he then also knew how much selling it would cost to pick up some cheap stock. Ever heard the term "Stop Raid"? In an unguarded moment, he even bragged about his prowess.

So much for "easy discipline". Ever since, I've found direct alerts and DIY far better options.

PS: Mind you, the practice wasn't restricted to a single "bad apple"; sooner or later, many more cottoned on, and there's plenty of anecdotal evidence that some of the more enterprising ones may even have employed computer programs to collate those conditional orders.

 

[burglar]

... Ever since, I've found direct alerts and DIY far better options ...

Just when I thought yay,
I won't have to search for a new broker!

Oh! Well!

 

[nulla nulla]

Wowee! The Inventors of the Wheel!

15 years ago, a broker I was with at the time (and who should better remain unidentified) offered such conditional orders. I thought, give it a try - certainly helps maintaining trading discipline. And that's a good thing, right?

Well, it would've been a good thing for me, had it not become a much better thing for that broker:
Knowing where his clients had placed the stop, he then also knew how much selling it would cost to pick up some cheap stock. Ever heard the term "Stop Raid"? In an unguarded moment, he even bragged about his prowess.

So much for "easy discipline". Ever since, I've found direct alerts and DIY far better options.

PS: Mind you, the practice wasn't restricted to a single "bad apple"; sooner or later, many more cottoned on, and there's plenty of anecdotal evidence that some of the more enterprising ones may even have employed computer programs to collate those conditional orders.

I heard that they waited until everyone else went to lunch, then launched a short attack. The subsequent selling through other peoples stop losses triggered further automated sell downs, at which point they would close out their shorts for a handy profit.

 

[pixel]

Just when I thought yay,
I won't have to search for a new broker!

Oh! Well!

No need to do anything drastic, mate;
if you're happy with all other aspects of your broker's service, you don't have to change. Simply be mindful of the possibility that your conditional orders can be read and acted upon, or rather acted against, by anyone with access to those orders. The easiest way to avoid becoming a statistic is to keep your stop level to yourself; set an alert one tick above your stop, and reassess the situation when the alert fires. With a bit of experience, you can even recognise a stop raid and join the buyers on the way up, instead of selling. But that is not for everybody - stop raids are usually over within a minute or two.

 

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I heard that they waited until everyone else went to lunch, then launched a short attack. The subsequent selling through other peoples stop losses triggered further automated sell downs, at which point they would close out their shorts for a handy profit.

yes, the Lunch Time Lull is a suitable occasion; but it's more important that the current depth screen is very thinly populated. These predators just wait for an occasion when bids have dropped off, either after being filled, or due to some general lethargy and disinterest in a particular stock. I remember ASB used to fit that description on a number of occasions. And once I had a large CFD position in Village Roadshow wiped out. At that time, I didn't even have a stop order in place, but was liquidated because I was given less than 5 minutes to fill a margin call - which was technically impossible. By the time the call expired, VRL had already recovered, but my position was liquidated regardless.
You live and learn - or you don't trade very long.