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burgie
214
burgie 2014.04.29 16:33 

A while back I used BUY and SELL stops to place my trades, because they are easier to program and handle. After a while I found out that my broker (market maker) was hunting these stops, so I switched to market orders.

Now I have an account at another broker, who market themselves more as an exchange and offer STP. I do believe that this broker wouldn’t hunt my stops. But I do wonder if my pending orders show up in some order book or not.

So I wonder if using BUY and SELL stops is a good idea. Does anyone know if it is better to avoid them?

Alain Verleyen
Moderator
28551
Alain Verleyen 2014.04.29 16:38  
burgie:

A while back I used BUY and SELL stops to place my trades, because they are easier to program and handle. After a while I found out that my broker (market maker) was hunting these stops, so I switched to market orders.

Now I have an account at another broker, who market themselves more as an exchange and offer STP. I do believe that this broker wouldn’t hunt my stops. But I do wonder if my pending orders show up in some order book or not.

So I wonder if using BUY and SELL stops is a good idea. Does anyone know if it is better to avoid them?


How do you know that your broker was hunting your stop orders ?
SYED NAUFAL GADDAFI
1401
SYED NAUFAL GADDAFI 2014.04.29 16:54  
And pending orders, SL, TP all are on broker side. That is why there is what we call as stealth pending orders, stealth SL/TP.
burgie
214
burgie 2014.04.29 18:53  
angevoyageur:
How do you know that your broker was hunting your stop orders ?



Well, first of all I noticed an increase in losses, which could be replicated in a back test. Since I had my suspicions about this broker, I opened an account at another broker. I then ran the same EA on both accounts. The first broker would consistently open pending orders earlier than the second broker, in some cases even widening the spread so that they could just reach my order. In a number of cases the price would then run the other way and reach my stoploss. That meant a loss at the first broker and no trade at the second broker.

When I use market orders with the first broker, the trades are opened roughly at the same time when you account for the difference in spread.

(Since this forum doesn’t allow broker topics, I will not name the specific brokers.)

burgie
214
burgie 2014.04.29 18:57  
deysmacro:
And pending orders, SL, TP all are on broker side. That is why there is what we call as stealth pending orders, stealth SL/TP.

Yes, I know pending orders, SL and TP are server side but that was not the point. My question was that if you use a true STP broker and not a cheating market maker broker, could a pending order still be visible to another party? Would it be visible in the order book for instance? I always assumed it wouldn’t be but now I’m not so sure.

burgie
214
burgie 2014.08.23 17:35  

Purely based on observations I have to conclude that BUY and SELL stops are indeed visible to others than your broker. Once I started using market orders with the new broker instead of pending orders the results improved with both brokers. It could be coincidence of course but I have my doubts. With HFT firms buying all sorts of data from brokers I wouldn’t be surprised if they get to see all the pending orders as well. And arbitrage between two British ECNs is not unthinkable.

idh
114
idh 2014.08.23 17:52  

birgie, I believe your thinking is on track. non MM, STP is a better bet (this is what I use in the UK). Which broker are you eyeing up for STP?  

burgie
214
burgie 2014.08.24 16:53  
idh:

birgie, I believe your thinking is on track. non MM, STP is a better bet (this is what I use in the UK). Which broker are you eyeing up for STP?  



I can't mention the brokers name because that is against forum rules. But the second broker is supposed to be a STP broker. However, that broker also admits that it caters to HFT firms. And they do seem to mix the trades from different type of traders. For instance, I have gotten trades on the EUR/USD with prices with 6 decimals instead of 5. Apparently that can happen when a HFT is on the other side of your trade. So if such traders would get access to pending orders, it would be like a candy store to them.
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