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I think the "risk" will just transfer a bit further down the chain, instead of stops being held at the exchange, just hold them at the broker, assuming they will take that "risk". I say "risk" because ultimately it's always the clients responsibility where a stop order gets filled, but I imagine some brokers may offer to hold the orders on their gateway servers in front of the exchange, so that clients don't have to rely on a software stop inside their client/platform.
Platform: Sierra Chart, TOS, Tradestation, NinjaTrader
Trading: energy
Posts: 114 since Jul 2012
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Troublesome, because instead of having the full book's liquidity helping you get filled, they are now at the mercy of the infrastructure and local broker/platforms ability to process a marketable order. The real problem of BS high frequency cancels making the book untrustworthy is completely overlooked and they pass the buck to the brokers.
Stops are not really protective against a big drop, exactly because of this (you won't get filled until way down.) But they can have a place on ordinary days.
This will affect a lot of people's trading. Will it make anything actually safer? Somehow I doubt it. Has it been proven that cascading stops cause big drops? I wonder about that.
It could, of course, convince someone to be more disciplined and attentive to his position. But for many individual retail traders, not having the automatic discipline of a stop may just open them up to more losses, much of the time.
Why are they going backwards? Why should a broker who sells overflow be holding your stop? Does this not create a big conflict of interest in terms of broker Internalization? This looks like a new revenue revenue stream for brokers more than anything else. Brokers can charge more on stop orders, plus have more information to execute against it/ or to on sell it.
Using a black swan event to justify this change is ridiculous.
"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
This part is certainly not true, come on this isn't Forex! If you are talking about selling order flow, but I am 99% sure it only applies to actual market orders being executed, and not resting orders or limit orders.