{"id":9432,"date":"2011-01-26T18:52:53","date_gmt":"2011-01-26T23:52:53","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=9432"},"modified":"2021-05-06T15:04:38","modified_gmt":"2021-05-06T19:04:38","slug":"why-am-i-getting-stopped-out-more","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/why-am-i-getting-stopped-out-more","title":{"rendered":"Why Am I Getting Stopped Out More?"},"content":{"rendered":"<p>One of our new trainees noticed with <a href=\"http:\/\/www.smbtraining.com\/blog\/frustrated-trader\">frustration<\/a> in his voice that he was getting stopped out more in his swing trades. \u00a0<a href=\"http:\/\/www.smbtraining.com\/blog\/morning-thoughts-120\">Adam<\/a><a href=\"http:\/\/www.smbtraining.com\/blog\/morning-thoughts-120\">\u00a0Grimes<\/a> and I sat in my office discussing more little trades we were getting stopped out on intraday. I read about this complaint in the blogosphere and all things Twitter. Let me offer a potential reason.<\/p>\n<p>So you probably have heard about this HFT (High Frequency Trading) thing. More orders are being handled by machines programmed to be faster than you can blink your eyes and smarter than most dis-cretionary traders. \u00a0I have noticed a new\u00a0algorithm dominating the Street. \u00a0It&#8217;s on the bid side and the offer side. I&#8217;ve seen it before but noticed it&#8217;s on more desks of late.<\/p>\n<p>So let&#8217;s say you&#8217;re trading ABC with a stop at 29.84. Thirty is a level but you are giving the stock some room. ABC drops 30 and a more conservative intraday trader goes to whack the bid for his 700 shares because now the security is below the level. X intraday is not a big trader. He is light. And he is risk adverse so he wants out if ABC ticks below 30. So X enters an order to exit.<\/p>\n<p>The buyer has an\u00a0algorithm\u00a0dedicated to getting the best price for their client. If the algo feels a sell order for even a hundred shares at 29.99 it will drop out the bid and try and get the stock cheaper. So the execution will be one hundred shares at 29.99 and the bid will disappear from 29.99 and indicate for 5-20 cents lower. The\u00a0algorithm\u00a0will buy the stock at 30 but will also allow those who want to hit the stock below 30 to do so and accumulate stock below. The algo might get 100 shares at 29.99 and the rest at 29.83 on the bid.<\/p>\n<p>Let&#8217;s say a few intraday traders are whacking below this 30 level. With this algo dropping out to get better prices a 29.83c fill is possible for the conservative intraday traders. After that happens your stop will go off. You, the swing trader, are out. The intraday traders are out. The buyer got his stock cheaper. And then the buyer will start going high bid again and resume buying at\/above 30.<\/p>\n<p>This new algo that is being used by more is a potential reason you are getting stopped out more.<\/p>\n<p>Mike Bellafiore<\/p>\n<p>Author, <em><a href=\"http:\/\/www.amazon.com\/One-Good-Trade-Competitive-Proprietary\/dp\/0470529407\/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1296084902&amp;sr=1-1\">One Good Trade <\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of our new trainees noticed with frustration in his voice that he was getting stopped out more in his swing trades. \u00a0Adam\u00a0Grimes and I sat in my office discussing more little trades we were getting stopped out on intraday. I read about this complaint in the blogosphere and all things Twitter. Let me offer a potential reason. So you &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/why-am-i-getting-stopped-out-more\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[1557,333,4674,1556,1193,653,1354,1349],"class_list":["post-9432","post","type-post","status-publish","format-standard","hentry","category-mike-bellafiore-bellas-blogs","tag-algorithm","tag-hft","tag-one-good-trade","tag-stopped-out","tag-trader-education","tag-trader-training","tag-trading-coach","tag-trading-mentor","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Am I Getting Stopped Out More? | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/why-am-i-getting-stopped-out-more\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why Am I Getting Stopped Out More? | SMB Training\" \/>\n<meta property=\"og:description\" content=\"One of our new trainees noticed with frustration in his voice that he was getting stopped out more in his swing trades. \u00a0Adam\u00a0Grimes and I sat in my office discussing more little trades we were getting stopped out on intraday. 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