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Possible alternative to non-server based trailing stops

  • Post #1
  • Quote
  • First Post: May 17, 2006 6:48am May 17, 2006 6:48am
I am demo trading with CMS trading systems. One negative about it is possible exposure to huge losses if VT crashes because their trailing stops are not server based. I found what I think may be a solution to this. I found this link on the
internet: www.tradebolt.com. Is states on their site: "TradeBolt™ is the world's premier fully automated system trading application. TradeBolt will take buy/sell order signals from any signal-generating system and automatically send them to any broker for execution within milliseconds". Has anyone used this program and/or after reviewing the site, what is your opinion of this improving the risk factor of trading with CMS trading systems?
That sounds even more dangerous than the possibility of broker down time.


Why not just open an account with a broker were orders are kept broker side ?

I never really thought that brokers would operate like that, going to call my brokers now and check.
Their FAQ states:

- Fully automatic trading or user can manually approve all orders.

- Automatic auto-relogin if broker connection goes offline and back online.

- Error check to report if broker goes offline.

I dont understand what u would gain from having this product if your system is down other than a notice that it is down. I am probably missing something.
In trading, there is no bullshit. You either make money or you don't.
Quoting mrgreen
Their FAQ states:

- Fully automatic trading or user can manually approve all orders.

- Automatic auto-relogin if broker connection goes offline and back online.

- Error check to report if broker goes offline.

I dont understand what u would gain from having this product if your system is down other than a notice that it is down. I am probably missing something.
There was a lengthy thread about stops being triggered for the broker's advantage (stop hunting).

The general point of the thread was whether or not the intent is malicious, brokers at WORST case will artificially bend prices of feeds to trigger stops and at BEST case use their client stops to determine their own trades (most brokers trade the market in addition to taking client orders and will use their client's collective stops as means for determining where support and resistance really do lie).

In other words, the less information you can give to the broker, the less inclined they would be to either manipulate price feeds or to trade larger positions against your individual trades and trigger your stops for their profit.

Let's just put it this way, if a broker, one day didn't have any stops to view against, their trading desk would have a lot less information to work with. This would, in essecense, be the poker equivalent to not showing your hand...you leave the other players guessing.

The software ISN'T the magic bullet, by any stretch of the imagination. You would have to have a very reliable internet connection, which can be expensive (but worth it). If any of you have ever traded stocks on a short term basis, it's almost a necessity now-a-days to have fiber optics or a dedicated T-1 (preferrably with a back-up T-1) in order to minimize the client-side downtime.

In my opinion, I see nothing wrong with trying to prevent the brokers from getting their hands on your stops (especially if you're like the guy's friend who traded 100 STANDARD lots and got burned when his broker manipulated the price almost 20 pips higher than any other feed we viewed just to trigger a stop...he lost almost $50K in one trade). I'm of the belief that if his stop had been client-side, his stop may not have been triggered (because the broker wouldn't have seen that juicy 100 standard lot stop sitting there).

For an individual trader, at worst case, they can call their broker to put in a stop order if their internet connection is completely down or they can't watch it and are afraid of their internet connection.

Me, personally, sometimes I'm confident enough to place stops with my broker...sometimes, I keep it to myself when I believe the price could easily hit a stop target. I have 3 internet connections and my broker on speed dial, and I'm never in a trade when I can't manually watch it during the day. However, everyone has a different reason for doing this.
  • Post #5
  • Quote
  • Edited at 8:41pm May 17, 2006 8:33pm | Edited at 8:41pm
Mr Mikal, Thanks to your explanation I now think I understand what Victor Niederhoffer is trying to convey in Education of a Speculator when he writes:

"Zoologists have devoted considerable effort to developing a theory that explains the why, when, where, and how of deception.
Predators don't select prey in proportion to their occurrence. Rather, rare prey is ignored more frequently than its rarity will account for. One plausible explanation is that predators form a search image of the more common prey to enhance the likelihood of capture. Some prey will take advantage of the disproportion by evolving concealing coloration, thus achieving a deception rarity. Thereupon, the predator's "optimal search rate" for that prey wil decrease, his "stare duration" will increase, and in plan English, he won't waste his energy searching for deceptive prey.
There are, of course, many possible ways of foiling predators besides concealing coloration. Yet concealing coloration seams to be the most energy efficient...............................
There is a cost, however. The energy used for the deceptive behavior crowds out the other life-enhancing features. Balance must be struck."
In trading, there is no bullshit. You either make money or you don't.
Quoting mrgreen
Mr Mikal, Thanks to your explanation I now think I understand what Victor Niederhoffer is trying to convey in Education of a Speculator when he writes:

"Zoologists have devoted considerable effort to developing a theory that explains the why, when, where, and how of deception.
Predators don't select prey in proportion to their occurrence. Rather, rare prey is ignored more frequently than its rarity will account for. One plausible explanation is that predators form a search image of the more common prey to enhance the likelihood of capture. Some prey will take advantage of the disproportion by evolving concealing coloration, thus achieving a deception rarity. Thereupon, the predator's "optimal search rate" for that prey wil decrease, his "stare duration" will increase, and in plan English, he won't waste his energy searching for deceptive prey.
There are, of course, many possible ways of foiling predators besides concealing coloration. Yet concealing coloration seams to be the most energy efficient...............................
There is a cost, however. The energy used for the deceptive behavior crowds out the other life-enhancing features. Balance must be struck."
Glad I could be of service???

:-)
  • Post #7
  • Quote
  • Edited at 9:03am May 18, 2006 8:34am | Edited at 9:03am
What i meant was that by adopting a method of hiding your stops, either thru the use of this type of software or by sittng at a pc and manually exiting a trade that goes against u, that u are in effect adapting to the environment of the market and are starting to develop a form of 'protective coloration' so that the predatory markets won't get u.
At some point if u adapt well and last long enough you become the predator. In which case the market adapts to you by no longer honoring your signal, but setting a trap instead. And the circle continues as long as there will be speculators and markets.
In trading, there is no bullshit. You either make money or you don't.
Quoting mrgreen
What i meant was that by adopting a method of hiding your stops, either thru the use of this type of software or by sittng at a pc and manually exiting a trade that goes against u, that u are in effect adapting to the environment of the market and are starting to develop a form of 'protective coloration' so that the predatory markets won't get u.
At some point if u adapt well and last long enough you become the predator. In which case the market adapts to you by no longer honoring your signal, but setting a trap instead. And the circle continues as long as there will be speculators and markets.
MrGreen,

Your "no-stop" strategy works great for day traders that NEVER leave their station during a trade. My biological functions usually win out in that battle, I have to enter stops during absences from the trade station. I'm also wary of the PC or internet connection failing. Both have happened with bad results.

Alan
Quoting Sleuth
MrGreen,

Your "no-stop" strategy works great for day traders that NEVER leave their station during a trade. My biological functions usually win out in that battle, I have to enter stops during absences from the trade station. I'm also wary of the PC or internet connection failing. Both have happened with bad results.

Alan
There are other options...

If you have the following items:

1) a broker that has a trading API
2) access to a programmer (or you are a programmer)
3) a server colocated at a place like Rackspace or something

You could build your own service that hosts your stops. It's not terribly difficult assuming you have those 3 things above.

It's definitely about as good an alternative as hosting the stops in your head...and while not as reliable as broker-hosted stops, they won't run the risk of being run at...that's not to say they won't get hit...BUT...at least the broker won't see them.

I know it sounds a little expensive, but I know there are lot of programmers on this forum and probably a few who have their own servers hosted in various stable and redundant locations.
  • Post #10
  • Quote
  • Last Post: May 30, 2006 1:13am May 30, 2006 1:13am
The best thing to do is just stay away from brokers where using a trailing stop is reliant to whether you are connected with their platform or not.
- SAFE TRADING MONEY DUCK
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