Question on Trigger Entry Price

[STEELML]

If a stock reaches the program's trigger entry price and falls back during the day but the price remains below your projected stop do you still enter the stock?

I have noticed that the stock reaches the trigger price a large percentage of the time, but I think it is because someone has placed a buy limit order for the trigger price who uses this program. The market maker seems to take out the limit order, and the stock then moves back down. On almost every trade I have made the high of the day was the program's trigger price, and on shorts the low of the day was the trigger price.

It would seem to me that by buying anyway would lower your risk, but by the same token, the stock has artificially reached its trigger price. Comments?

[spp]

If a stock reaches the program's trigger entry price and falls back during the day but the price remains below your projected stop do you still enter the stock?

I have noticed that the stock reaches the trigger price a large percentage of the time, but I think it is because someone has placed a buy limit order for the trigger price who uses this program. The market maker seems to take out the limit order, and the stock then moves back down. On almost every trade I have made the high of the day was the program's trigger price, and on shorts the low of the day was the trigger price.

It would seem to me that by buying anyway would lower your risk, but by the same token, the stock has artificially reached its trigger price. Comments?

Hi Steel
If I understand your question, I asked something very similar here some time back & I got some responses you'll want to check out:
http://www.mtptrader.com/showthread.php?t=522

To extrapolate on what I got from Matt & Tonys' responses:
1) That would entail taking signals where price is going in the wrong direction. Even though the Stop level hasn't been hit yet in those trades taking those signals intrinsically steers you into trades where price has now reversed against you to some degree. Some of these will work & some not, of course, but those trades will never be the ones that go immediately in your favor and keep going in your favor.
2) Entering these signals at that point are not what they're doing so they don't have the historic results to be able to strongly advocate them.

Now again if I understand what you're asking - you're asking them something slightly different than I was. I believe you're assuming for the sake of your question that the trade setup offers the MTP required =>2 RR at the entry price that would be obtained from using the standard Stop order at the extreme of the reversal bar. You'd be waiting for a small pullback to lower the $ risk on the trade. In contrast, I was asking because the trade setup did NOT offer the suggested =>2 RR at the standard Stop order level; I was looking at waiting for a small pullback so as to be able to obtain that suggested =>2 RR.

Only thing I'll add to their reponses is regarding your thought that the "buy limit" entry orders are being triggered because of users of this program. I believe you're referring to the standard MTP Stop entry order? The markets that most are trading intraday here I would think would be the ones with high daily volume. For instance, I'm trading the U.S. financial index futures & the U.S. bond futures intraday. I feel confident that the daily volume in those are far too high for all MTP users even collectively to be having much of any effect on the trading in those markets; those markets are just too big. That's not to say that if MTP traders are possibly putting their stops at some obvious point where the large multitude of other traders using various other methods are putting theirs - that could possibly be happening. But maybe you're trading some stocks with thin daily volumes that you feel other MTP traders are trading also.....
Regards
Sean

[STEELML]

I guess what I am saying is that in almost EVERY case the trigger entry price gets hit the very next day. In many cases, the stock closes below the trigger entry. If you see the stock is going to close below the trigger entry would it still be prudent to buy the stock thereby lowering your initial risk? After all it WOULD have hit the trigger entry had you placed an order for it.

It seems to me the market makers are grabbing the buy limit orders early in the morning to get people into the stock and the stock doesn't trade near that price the rest of the day or the next day.

I consider it a "fake high" of the day when it is the exact trigger price of MT Predictor. It seems to me that using a strategy of a buy limit order before the market opens is a "bad strategy" that can send false signals.

[jswin]

Hi STEELML,
May I ask, are you trading real stocks or are you trading derivatives like spreadbetting or CFDs?
Spreadbetting, while attractively leveraged, often triggers, as you say, 'fake' stops and limits. It really annoyed me. I am now moving into CFDs. You can use a traditional market-maker model, where price will be adjusted slightly from the true underlying, or another model where you trade at the guaranteed underlying price. I use IG Markets. They are dire for spreadbetting due to enormous spreads, but their CFD's trade at the underlying price - guaranteed - and you also have a comprehensive range of orders.
I know this does not answer your question about waiting for price to retract to improve R/R, but I certainly feel more comfortable placing orders now knowing they'll be filled when the market fills them, not when the market-maker decides to haul me in...
CFD's also give you considerable leverage - typically 10% margin is required.
I've asked questions previously on the forum concerning CFD's and spreadbetting but not received answers. CFD's are the best thing I've found for my needs.

[STEELML]

I am only trading US stocks. I just find it incredible how many market makers are taking out the buy limit orders early in the trading day. It almost seems like you have to wait for a second confirmation before entering.

[jswin]

In that case you should probably check out a good CFD provider such as IG Markets, who cover at least the S&P and certainly any stocks liquid enough to be suited to MTPredictor (I am just a customer of theirs) for the simple reason that they trade at the real market price - not a market-maker's ammended price. You might see trading on margin as a bonus.