Quick trailing stop loss question - Aussie Stock Forums

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  1. #1

    Default Quick trailing stop loss question

    I've just setup a trailing sell conditional order on etrade, and it noted that if the share price skips over the stop loss trigger, then the order won't be placed?

    In that case, what would you do? It seems a little strange, as you ut in the order to prevent loss, yet if the price skips over the trigger, too bad?

    Perhaps i'm not understanding it correctly. Any help would be great

  2. #2

    Default Re: Quick trailing stop loss question

    I think the one that was confusing on the Etrade website was this :

    "If your order is triggered and the market price moves beyond your limit price then the order will not be placed."

    There are 2 prices to the Stop Loss:
    - Trigger Price : the price you want to sell at
    - Limit Price : the absolute lowest price you are willing to take

    Example :
    Place a Trailing Stop Loss on XYZ which has stayed at $1 the whole week :
    Trigger Price : 5% of Yesterday's Close ($0.95)
    Limit Price : (the absolute lowest you would ever sell at - $0.80)

    So if the price skips down below your trigger price of $0.95 and trades through 0.94, 0.93, 0.92, if there is enough volume, your stock will sell.

    If the price skips down below your limit price of $0.80, your stock will NOT sell.

  3. #3

    Default Re: Quick trailing stop loss question

    Thanks for the reply.

    So basically you'd put the limit price a few cents lower than the trigger price, to prevent the stop loss from not going through?

  4. #4

    Default Re: Quick trailing stop loss question

    Commsec has a minimum price difference between the trigger and limit prices.

    Etrade Iím not so sure as I usually trade more of my stocks from Commsec.
    I usually set my limit a few cents below trigger, youíre right. Just to give a Ďprice rangeí to get my stock sold off.

    For example on BMN I currently have my trigger :
    BMN Price 3.33
    Trigger about 10% lower at 3.033,
    Limit about 0.09% lower at 3.030.

    It all depends on your trading strategy. I think BMN will rise again, so Iíve got a loose 10% trigger. My limit is very very close to the trigger. Thatís because my thinking is that if it doesnít sell at 3.033, forget it, Iíd rather it slip through my limit and NOT get sold.

    I could put my BMN trigger at 3.00 and my limit at 2.00, but to sell BMN at 2.00, thatís a waste. Iíd rather it slip through, then consolidate and rise again.

    Everyone has different trading thoughts and methodsÖup to you to figure out your own system..!

  5. #5

    Default Re: Quick trailing stop loss question

    Excellent posts purple. Thanks again

  6. #6

    Default Re: Quick trailing stop loss question

    No worries svensk. What I posted above is the physical aspect of placing stop losses.

    I forgot to post about the emotional aspect of stop losses, which is doing this

    And hoping that the stock does not hit your stop loss!!! LOL. Nah, disregard this post.

  7. #7
    Kung Fu Kid Happy Profits!'s Avatar
    Join Date
    May 2006
    Sydney, Oz

    Default Etrade's trailing stops don't work?!

    Harumph! I'm mightily peeved and gonna fire off a phone call to the Etrade boffins. Hope it won't be a futile exercise

    Anyway, true, this is a whinge but I'm just curious whther this has happened to other people and if it hasn't, to remind those of you with Etrade to take a close look at your "Conditional Orders" section!!

    Quote Originally Posted by purple View Post
    ...I forgot to post about the emotional aspect of stop losses...
    Exactly, purple, this is THE main reason I signed up with Etrade and moved much of my capital over from Comsec. Because Etrade had a so-called "trailing stop" facility, my reasoning was that I could dispense with the nail-biting and hair-pulling and just lay back as my little buddy, TS, protected me.

    But much to my dismay and annoyance, I've just checked and that's not the case! In fact, every single Trailing Stop I've put in place has arbitrary trigger prices that do not correspond to the Price Level I've chosen!

    Long winded example, optional reading:

    Eg. My BMN stocks that I hold in Comsec recently hit their (manual, of course) Stop Loss price and sold out at $2.76, which was the limit price I'd set (being 30% of the high). I'd set the trigger price at $2.77. So, nothing unusual there. Instructions set and complied with.

    After 2 days, I was curious why Etrade hadn't notified me of the sale of my BMN stocks. Same Stop Loss conidtions - I'd set the the trigger price as a "30% Trailing Stop of Yesterday's High" (with no Limit Price set). Lo & behold, I just checked and it's got a nonsensical trigger price of $2.17! Which does not correspond to ANY technical 'high' of any sort! That means Etrade's skipped my (valid) trigger price of $2.76 and is just merrily 'pushing down' the trigger price, which violates the very reason for a trailing stop.

    Technical details:

    16/4/07: Price reached a high of $3.94

    13/6/07: Open-$2.85 High-$2.90 Low-$2.75 Close-$2.81 (unless I'm severely mistaken, the price has not skipped my original trigger price of $2.76)

    And so it goes for all the other Trailing Stops...

    Sigh, I'm just glad I caught this early and not have catastrophic damage (about $600 so far). Guess I'll stick back to manual setting of my Stop Losses and forget about this truly 'dangerous' set and forget routine. It's like getting faulty brake pads for your car!
    Last edited by Happy Profits!; 18th-June-2007 at 06:33 AM. Reason: butter fingers syndrome!
    Sigh...it seems de rigueur so here goes: please do not miscontrue my opinions as financial advice for it will most probably lead to financial ruin! Namely yours!

  8. #8

    Default Re: Quick trailing stop loss question

    Are the trailing stop loss in etrade calculated and triggered in realtime?
    eg. if it drops 10% intraday, then the sell is triggered?
    or is it calculated once a day at a particular time?
    Batman: "Experience teaches slowly, Robin. And at a cost of many mistakes."

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