{"id":9520,"date":"2011-01-31T16:13:43","date_gmt":"2011-01-31T21:13:43","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=9520"},"modified":"2021-05-06T15:03:06","modified_gmt":"2021-05-06T19:03:06","slug":"why-i-am-getting-stopped-out-more-part-iv","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/why-i-am-getting-stopped-out-more-part-iv","title":{"rendered":"Why Am I Getting Stopped Out More? (Part IV)"},"content":{"rendered":"

During Part I,<\/a> Part II<\/a>, and Part III<\/a> of this series we identified a new algo on the desks of more traders that may be\u00a0causing us to get stopped out more. For Part IV let’s offer some solutions.<\/p>\n

Some ideas from SMB Readers:<\/p>\n

Trade instruments wich are more liquid or trade on a higher timeframe.<\/p>\n

Cheers,
\nMarkus<\/p><\/blockquote>\n

This is an excellent adjustment to consider especially for those who wish to trade with big size. \u00a0However, I’ve noticed that stocks with tight spreads are trading with spreads that in practice are wider.<\/p>\n

Idea is to trade with smaller position and than add to them as you get confirmation of breaking new levels and moving stops toward.<\/p><\/blockquote>\n

I like this adjustment. Trade smaller until you really are confident and then press. Do not take small losses here and there because you are getting wicked out of positions you cannot hold against you.<\/p>\n

What about leaving a bid out there not for the purpose of getting hit, but to control how far down the algo wants to take the stock? For example, if you go long ABC at 30, have a bid at .85 or .90. If the algo is going to cut in front of you, then in theory it shouldn’t touch your bid at .90, thus giving you conviction to stay in the play. If for some reason you do get it, then that’s even better. Then you would just manage your risk accordingly…<\/p><\/blockquote>\n

Extremely creative here. \u00a0This is something I would expect from our friends at Kershner Trading.<\/p>\n

Maybe its time to revert to the low liquidity strategy of fading highs and lows.<\/p><\/blockquote>\n

There are firms that specialize in this. I would suggest that they’re gonna have trouble controlling their risk at the tops and bottoms because of the new algo. And that will infect their results. \u00a0They may want to start smaller and wait to build a position so they are not wicked out. But this can really work if traders execute well. Excellent idea.<\/p>\n

“Hide your orders.” From @biggercapital<\/p><\/blockquote>\n

Great suggestion and an old school back-in-the-day solution. \u00a0Hard to do these days, as the algo prints a hundred shares of your hidden order and then will start cutting you. But you may have a way to do this that we cannot. Knowing Michael this is probably the case so maybe an idea worth exploration at your firm.<\/p>\n

It’s a dilemma… the only solution would be setting the stops lower, but then if it’s a real reversal you will close at a much worse price.<\/p><\/blockquote>\n

I agree that for most positions larger stops are necessary. I very much like where you heading here. Of course to do this means you must trade on a longer time frame so that your gains will be larger to account for the bigger losses when you are wrong.<\/p>\n

Tomorrow we will wrap up this series with a complete list of adjustments. Thxs for reading.<\/p>\n

Mike Bellafiore<\/p>\n

Author, One Good Trade<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

During Part I, Part II, and Part III of this series we identified a new algo on the desks of more traders that may be\u00a0causing us to get stopped out more. For Part IV let’s offer some solutions. Some ideas from SMB Readers: Trade instruments wich are more liquid or trade on a higher timeframe. Cheers, Markus This is an … 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":[1109,4691,333,4674,18,653,1354,1349],"class_list":["post-9520","post","type-post","status-publish","format-standard","hentry","category-mike-bellafiore-bellas-blogs","tag-adjustments","tag-algorithmic-trading","tag-hft","tag-one-good-trade","tag-smb-capital","tag-trader-training","tag-trading-coach","tag-trading-mentor","no-post-thumbnail"],"yoast_head":"\nWhy Am I Getting Stopped Out More? 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