Monday, January 15, 2007

Dumb luck or "TDAmeritrade Trade Triggers"

Vanity is not on the list of my sins, but once in a while anybody may get too excited by momentary success and post something similar to what I posted on January 12th

Now I have to pay the price and try to explain how that happened that on January 11th I did not own any of the stocks mentioned and on January 12th I become "a proud owner" of all 3 of most potent breakout stocks on my latest lists ( not to over stress YAHOO % GAINERS list's "membership" )

I have not found all of them in one day, they just happen to be traded at the same day ( which never happened to me before, gladly I came home for lunch and saw 3 buys triggered, so I closed BHIP) and (EVOL) - I just had to because I exceeded my margin).

As for "WHEN" I found them:
(BHIP) I put on watchlist on Decemebr 27 and set Trade Trigger "if bid >=1.8" then place limit buy at 1.83 - it fired on Jan 10th, I sold at the same day, set trigger again "if bid >= 2.3 place limit buy at 2.34 - I did not expect it to be executed that fast, namely January 12th.

Next, (EVOL) -found on Jan 11th ( night) set Trade Trigger "if bid>=1.39 then buy limit 1.42" - so not much profit here, but still.

Next - (JADE) - found on Jan 10th, set trigger "bid>=4.79, then buy limit 4.83" - this one due to a dumb luck did not fire on Jan 11th ( 4.79 was high of the day), but instead fired on 12th.

What are "Trade Triggers"?
TDAmeritrade offers Trade Triggers as an extra trading tools - I find it way too useful to ignore. Those are not orders, they are CONDITIONS upon which the real order will be placed.

It has multiple advantages.
First, it is not transmitted to the market ( Or so AMTD claims), so Market Makers cannot see them and manipulate market based on "order expectancy".

Second - since these are not orders - your money is not committed to a trade UNTIL Trade Trigger executes. ( E.g. - if you have $10K trading portfolio, you can place 5 orders for 2K each - if like me you dislike to trade on margin, but if you use Trade Triggers you might place UP TO 40 conditional orders, of course you better understand what you do - otherwise you might exceed your margin and dip into day trading power and if you miss it - you out of the game for 90 days - no questions asked!)

I don't have to set "alerts" and watch stocks all the day long, I just have to re-adjust trigger prices according to a price action over time and patiently wait 1 day or 2 months, as long as I still like charts, for order to be placed without tying up my trading capital. I do it all the time when I expect breakout or breakdown, normally 4 out of 5 trades lose or gain 2-3%, but 1 turns to be a really big mover.

DavidDT

2 comments:

Anonymous said...

Whether or not TD Ameritrade is releasing this information to the market is questionable in my opinion. Too often I've seen my sell trade triggers activated by a sudden drop in stock (or option) prices and then immediately recover. Seems rather suspicious to me. The most recent time a heavily trading option was bouncing along between 4.80 & 5.10 for an hour. I had a sell trigger set to fire when "last is equal to or less than 4.60". You guessed it ... 2 contracts sold for 4.60, my order was placed to sell for 4.50, then the option price immediately returned to 4.80 ... hmmmmm ... go figure!

DavidDT said...

I would have to agree with you - I had the same kind of problems with AMTD triggers and stop losses orders. Even when set to fire on "last" and time&sales never has that price/trade - I got stopped out multiple times and it took hours to research "the problem" and every time with the same lame reason "bid dropped" - but it has got nothing to do with order set to fire based on "last".