Topic: Guys, stop using stop orders (Read 1116 times)

I don't trade right now, and I'm only watching the markets to see if I want to try it or not. I've been watching it for a long time now, and I do think that stop losses are necessary if you want to trade. You need to place them very well, and give them a lot of room, because like you said the market is to volatile, but in coins with enough liquidity, like bitcoin or ethereum, and in big exchanges, I think they are important. Markets follow certain patterns, and for instance a stop loss at $10263 in BTC at coinbase is important right now, or if you want to give it more room, put it at $9324. Bitcoin i attempting to break $12k right now, but if it fails, a pullback to $8300 or less is possible.

Besides, if you use stop losses, that means that you check the market regularly, or that you would get an alert if your order got matched, so you would always come to your exchange and check how the price would evolve. Maybe you would lose some money on that trade, if it activated your stop loss, just to bounce back, but it would actually save your ass a lot of times in the past. If you consider that the price came down from $20k imagine what a stop loss at higher levels wouldn't have done for you.

Yes the stop orders have really become nowadays a matter of serious concern.It would be only useful in times of big crashes.For example,if we had placed a stop limit order of 18,000 dollars when bitcoin's price was at ATH of around 20,000 dollars,then we would have got saved from a huge loss since bitcoin's price crashed to very low.But if bitcoin's price had increased more than ATH immediately to 21,000 after falling to 18,000,then we would have to regret for placing our stop loss order.

Stop LIMIT orders are probably the best bet. Even then often the larger the crash the more immediate the recovery.

Stop is not a stop!!! It does not sell at the price you set. Why cant it not be so easy? Because otherwise Bitfinex and Bitstamp and other exchanges can not manipulate. Bitfinex sell at any point of past price! Here is a screen dump where I lost $20 ...

https://drive.google.com/file/d/1fMOW1Va366UFa5WMcu1g0yuooreceBKv/view?usp=sharing

Not to resurrect an old thread, but this (undeniable) crash hasn't generated any stop loss cascade on the exchanges I monitor, quite surprisingly.

It can only mean 3 things:

1. people more clever with their stop loss, mainly using limit stop loss, or no stop loss anymore? Have you reduced your use of stop orders?

2. exchanges having improved their way of handling stop orders. Possible, but I doubt it, because that'd have required explaining how their handling works, as improving the process to reduce cascades has to have drawbacks as well

3. most likely, the fact that this crash has been more progressive (which is scarier IMHO), not really as abrupt as past ones? I've seen segments in this crash that can be defined as flash crashes, though.



Edit: I just went back to Kraken to check it (sorry to say that it's still broken btw), and if you check the BTC/EUR price on January 13, pretty interesting what happened there! Something strange also happened the same day in BTC/USD, so it might have been a bug, or a whale made a REAL mistake there.

That is exactly what is wrong with using stop orders. Stop orders are a nice tool when something goes down *in a long time* (like, at least 10min).

With a stop loss you CAN lose nearly all of your money. It happens during nearly all crashes, has happened, will happen again. You can check your exchange for spikes caused by large market sells, most likely triggered by stop orders.

The extreme case being selling your ETH for a few cents - you have pretty much lost all of your money, for a stupid reason.
And this is the case you describe - you are in a loss, most likely the market went bad, everyone is in a loss, all stop orders got triggered, if you're last in the chain, you're gonna get hit bad.

It has happened again for this crash, and it will happen again.
Go to Bitfinex, watch EOS/USD. There has been, again, some EOS bought at 3USD, and sold back immediately at 8USD. On which side do you prefer to be, the one who sold his EOS at 3USD? In any case this is a market sell. Most likely triggered by a stop. And it's not even just 1 idiot with a stop on a large amount, there may have been some little ones triggered after the idiot. That could have been you.

On one hand, I wish I had bought those EOS (no idea how much it was, but there was some volume there), sadly I had removed my orders 2 days before. On the other hand, if stop losses were avoided, "crashes" wouldn't be this bad, they wouldn't be automated, they would be human-driven and less instant, & thus probably less deep. But that requires everyone to stop using loss, or use loss-limit where available.


What you are guaranteed however, if the dip is instant, is to get maximum slippage. Noobs will think "I bought at 900, now it's 1100, I'm gonna place a stop loss at 1000, I will at least ensure a profit of 100". There is almost no chance it will sell at 1000, most likely it'll be around 950, *in this volatile market*. You'd better watch the order book before placing a stop, if it's very thin, 1 sell and your stop gets triggered way back.

Thanks for the advice.It appears newbies who find themselves on exchanges usually have no idea how to use these kind of orders and so eventually get their stuff messed and then the cascade of events follows.When I started trading I nearly got messed up through that too but was lucky they never got executed.

Yes you are correct that it could go straight through it w/o getting filled, but to reduce this risk, you can create an automated execution algorithm which can cancel/modify the limit price to another reasonable price.

exactly people that are invovle ob it he is the one who will make a decision that is we can say that this is not a good idea to continue but as long as we can see that this is a helpful thing to continue and we know how we are able to do for then we should do our best for.

Stop order is basically to put a  stop in case you are in a loss and you wont lose all ur capital in case the coin you are trading dips down too low in a very short time. Anyways its upto the trader how he uses it but i think most people do not use it to it actual purpose.

aren't you talking about a limit buy?


I mean, stop buy does exist, but... it's an even more stupid thing to use. And considering the BTC hardly went lower than 10500, I'm pretty sure you're talking about a simple limit buy, which is THE thing to always use (instead of market buys, which is as risky as market sell).

Why do we need to stop using stop orders? in fact, i have bought a lot of bitcoins during a Dip time because of my stop buy.
I had a open trade of $10000 to buy bitcoin at $10,500, and it was filled up today and i was not even awake when it happened.

Back to this old thread, stop losses stroke again, you can see IOTA's sold for like 1USD, as well as other coins on Bitfinex. Sadly I removed my orders a day before, to use my cash

Flash crashes, too many to count. They generally get blamed on fat finger error or whatever. Fundamental news like the example I gave you earlier with the SNB happens more often than you would think as well. Those ones don't come back anytime soon.

Yeah, that was my question, how many times have you witnessed this in 15 years?

What I'm describing has happened 3x in a few weeks, and that's just those I saw on the 2 exchanges & few coins I'm checking. One made the news and amazed everyone, showing that it's not something many people expect to ever happen.

stop orders can be a double edge sword in the cryptocurrency markets. specially when it  comes to altcoins and when you don't know they are pump and dumps. because a coin that is getting pumped and dumped can have weird swings due to its manipulated market. that means sometimes when you place an order like that you miss some opportunities.

this doesn't mean stop orders are bad or should not be used. it just means you have to be more careful and also place then with more care, or even if you could you should add some more conditions to the order that is placed before it is finalized. meaning your only condition for stop order should not be "price".

exactly. a beginner will be difficult to understand. can get into trouble

With up to 500x leverage much smaller % flash crashes can cause you much more financial pain.


What if it is due to some fundamental news that has a lasting impact on what that true value is?


Good luck.

I have tried very hard to help you here by explaining why you should not use a stop limit as a stop loss. It's entirely up to you if you want to learn the hard way and find out in your PnL column one day.

/Quin out

And in 15 years, how many times have you seen a flash crash down to -95% that did NOT rebound immediately?


The rebound totally depends on the true value, and that is exactly what you estimate to be that value that should be the limit price of a stop order.
Hey, I see a flash crash down to -95%, regardless of the reason, a hack or some chinese tweet, I buy!


On the ETH case, I hadn't seen this guy's screenshot btw. This shows that, as someone pointed out, it can be very true that some insider in the exchange could use the precious stop loss info to make big money. A million in a few seconds.... I wonder for how long that order had been sitting there.
https://stocktwits.com/jdemasie/message/86641301

A stop market is always guaranteed to get filled. A stop limit places a limit on the chances of it getting filled. A stop limit will not get filled at a better price than a stop market so its only use should be to avoid slippage on an entry.

In the example, you cite of a flash crash the market immediately rebounded. That means that yes you could have got lucky if you were trading without a stop at all because the market came back to you. It is far more common for a market just to suddenly start crashing and then continue long after your stop was filled. Not using a stop in those situations will cost you dearly.

I have been trading for more than 15 years and I'm just trying to give you good advice.