Bitcoin Forum

If you register a stop loss order at an exchange, somebody will know.

Sombody with a stash of bitcoins who knows both the order book and the stop loss orders, can practically compute in advance what he will earn if he dumps his coins, trigger the stop losses and rebuys.

At least, if you want to have this nonsafety feature, make it in your own bot, or just in your mind.

A dump with unknown stop loss orders, and just trigger happy and outstressed daytraders, may also be a win for the dumper, but not with the same certainty.

Edit: With stop loss I mean: An order, not normally shown on the order book, to be triggered at a set last price. The stop loss is then converted to a market sell.

I agree. The exchange owner will know for sure, so if they play the market themselves they can easily calculate if they will profit from a dump (that triggers stop loss orders). I believe I have seen examples of this an exchange engaging is this type of behavior, but it is impossible to prove as you can't see who are making the moves. I will just say that what I saw back then made me a lot more cautious of using stop loss (but I still use it). You still need some sort of stop loss and if you can program it yourself Erdogan suggests.

So program a bot to handle stop losses locally and no one can see it?

It's called 'Stop Hunting'

http://www.investopedia.com/terms/s/stophunting.asp

Yeah, rumors of stop hunting always scared me from using trigger orders. Also, on Bitfinex, I find that their engine lags so badly (especially when lots of trigger orders are being hit) that slippage is brutal when your stop gets hit.

Don't use stops to enter either.

This can be a nice solution, there are many softwares that allow to set stop loss orders without sending any information to the exchange,
for example "qt bitcoin trader".

:)

what would you recommend instead?

Bot would require:
-coding skills or buying one, which you have to trust then

plus:
-a own server, using electricity 24/7, business grade hardware costing up to 1000$
-fast, low ping, redundant, 100% uptime internet

or an professional vps with same reliability



i think thats not an easy neither affordable option for the average btc user

right, 5$/month for a fast vps is not affordable to average user...

A VPS is cheap to setup, but hard to do if you don't know how to do it. Also you would want tight security. It is either that or find an Exchange you trust, use a third party tool or stay awake 24/7/365 :) Regarding slippage I guess that is an unavoidable risk with that type of order.

For daytraders, I recommend not daytrading :) There is a tendency to obsessively think in shorter and shorter timeframes. I recommend leaning back, not trade every day. For instance, when there is a dump, consider if there are rational reasons, and if you can safely sell after a dip (that is what your stop loss order does), to rebuy lower. There is a risk of being left behind. You could consider the news to decide whether the price has fully reacted.

Bot programming is easy, I think only the scratch software is easier than that. I think only bitstamp has withdraw method avaliable in API, so its not a big risk let someone do it for you.

You can hire web services, for example, Amazon Web Service, and put your files there. Not sure how much it would cost(maybe no cost at all, in the end).

Fast internet is absolutely unnecessary, the messages are relatively short, and there is a limit of how many requests by second you can make without being baned, so you don't need to be paranoid about your ping.


I think you are overestimating the difficult to set-up a bot

Why are guys so paranoid on this board? If you are not trading in the millions of USD, then no one fkin cares about your 10kish stoploss order. Seriously...

There are lots of exchanges out there and some of them have very little volume. So I think this is actually pretty good advice considering how thin some of these markets are.

Most of those small exchanges don't offer stop limits at all.

Paranoid: If you trade at the big five, just use the API to program a bot to set a market order at a set price if a certain requirement is met.

Yes for example ANXpro supports API and now have hotkey support

Hotkeys (i.e. 'B' for Buy, 'L' for Limit, 'Enter' to execute, etc)
Real time updates on order books and order events
Click-to-trade feature to pre-populate order details for faster trading
New trade widget with real time quote estimation
Portfolio view visually representing your account balances in your default currency calculated at current exchange rates

ANXPRO (https://anxpro.com/?utm_source=forum_referral02&utm_medium=link&utm_campaign=marketing)

Are stops guaranteed? What happens in a flash-crash when the price drops, say $100 in one candle? Doesn't have to be caused by manipulation, can be a fat-finger trade when someone puts a few too many zeros on their order.

What usually happens in FOREX is you get slippage, meaning you can get forced out of your position at a crap price, then watch it bounce straight back up without you.

I've stopped using stop loss orders cause i was getting drained bit by bit and rather I just held onto whatever alt-crypto i was trading until they rose again.

Stop loss is crucial for trading and must be applied in every trade.This is one of the basic rules of money management.
Combined with risk reward ratio it will lead to great returns.
But yes, as it mentioned, stop loss can be found and traced.So a "stealth stop loss" is indeed a great tool.Combined also with "fake stop loss" it will change a lot in daytrading... but how to implement a "fake stop loss"?

exactly..

i did backtesting with stoploss and it did not give good results at all.  Ive been burned so many times.. with a quick peak down or up ..    and my stoploss triggers..    and 5min later price went up 10$ in the other direction..   so i stopped using stoploss..   and did much better..  since then.

stoplosses are just that. you avoid many small losses until you come across one big huge loss. if you dont trade on margin, you can hold unrealized losses indefinitely of course. but if you are using any kind of margin, stoploss is an absolute must. you lose 10% instead of 100% if you guessed the direction wrong.

Why would you want to sell when the price is going down? Isn't that the best time to buy it?

The market is generally not liquid enough for stop loss orders to be effective.

Additionally the price of bitcoin is so volatile that if the "stop" is triggered the price may fall significantly before your order is filled only to rebound within a few hours.