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.
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.
I wonder if using BUY and SELL stops is a good idea. Does anyone know if it is
better to avoid them?
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.
forum doesn’t allow broker topics, I will not name the specific brokers.)
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.
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
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?
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