ECHOpro Trailing Stop Orders

 

Trailing-Stop orders (T-STP) have been implemented in the ECHOpro system. There are two types of the trailing stops supported: 1) Manual, and 2) Automatic. The Manual Stops are entered in the stand-alone fashion – they are not tied to any other order in the system and are handled in a similar way the existing Server Stops are processed. The Automatic Stops, on the other hand, are tied to an existing order and follow the “life” of that order. The examples listed below describe the difference between the manual and automatic trailing stops in more detail.

 

IMPORTANT NOTE:

Use of this feature is at your own risk only – no financial responsibility will be taken for malfunction of the system.

 

In order to support the T-STP orders new settings have been added to the ‘Misc’ page of the Global Order Entry Settings window. These settings include the ‘Trailing Amount’, ‘Trailing Increment’, ‘Quote Market’, and ‘Auto-T-STP’ order options. Please take note of the following features:

 

1.      For the trader to use the trailing stops he must be first enabled for the feature. If the trader is enabled, then the T-STP value is added to the ‘Price Type’ field pull-down list in the order entry windows of ECHOpro. When in Level II Order Entry you will use the ‘Tif’ field to select the T-STP value.

2.      When entering a T-STP order in Level I Order Entry, the ‘Trail Amount’ is entered into the ‘Price’ field (‘Price’ field is re-named ‘Trail Amount’ when Price Type is set to T-STP). The trail increment is entered into the ‘Stop Limit Price’ field, which is renamed ‘Trail Increment’ when Price Type is set to T-STP.

3.      An Auto-T-STP order can be attached to every order by checking the option located at the bottom-left of the ‘Misc’ page of the Global Order Entry Settings window. When this option is checked, a second, T-STP order is sent automatically for every regular order sent.

4.      The Auto-T-STP order setting can be modified via the Order Attributes (Alt + R) dialog.

5.      Two new columns have been added to the Trading Monitor: ‘Trail ID’ and ‘Attrib’ (viewable from the “All Orders” and “Open Orders” tabs).

6.      T-STP orders are only available for those markets that support MKT orders.

7.      Price election will be checked between 9:35 AM and 3:55 PM ET only.

8.      Price election will be done using trades marked as “regular” only.

9.      Only a “regular” trade that is within the market (Bid <= LastSale <= Offer) will be used for price election.

10.  An order will not be released if the market is crossed.

11.  Only NBBO (Level 1) prices will be used to determine the current market.

12.  All trailing stop orders will be canceled if the market quotes are lost or if a system malfunction is detected.

Your comments and suggestions are welcome.

 

 Usage example #1:  MANUAL T-STP Entry

1.      Current Last Price for symbol INTC is 27.27.

2.      You want to BUY 1000 shares of INTC T-STP with Trailing Amount of $1.00 and Trailing Increment of $0.25. If the price rises to 28.27 (27.27 + 1.00), then your order is triggered as a BUY 1000 shares of INTC at MKT. If, however, the Price drops $0.25 (Trailing Increment) below the initial current Last Price, to 27.02, then a new triggering price will be computed off of the new current Last Price. So if the Price drops to $27.02, then the “trigger price” for the trailing stop order becomes $28.02, instead of $28.27. In this instance, when the price rises to $28.02, the T-STP is triggered as a BUY 1000 shares of INTC at MKT.

3.      To manually enter a trailing stop (T-STP) from Level I Order Entry, use the following procedure: select ‘T-STP’ from the pull-down list in the ‘Price Type’ field; enter ‘1.00’ in the ‘Trail Amount’ field; enter ‘0.25’ in the ‘Trail Increment’ field below it. For Level II Order Entry, you select ‘T-STP’ from the pull-down list in the ‘Price Type’ field; enter ‘1.00’ into the ‘Price’ field to the left of the ‘Price Type’ field (Trail Amount); enter ‘0.25’ into the window to the right of the ‘Price Type’ field, as the ‘Trail Increment’.

4.      Note that if the Trail Increment is set to 0 (zero) then the new triggering price will be computed with every downward movement of the last price for the stock.

 

Usage example #2:  AUTO T-STP Entry

1.      You want to SHORT 1000 shares of INTC at the limit price of $27.27. At the same time, you want to issue a T-STP order to protect against any losses of $1.00 or more per share which could be incurred as a result of executing any portion of or the whole SHORT order. In order to send an automatic T-STP order with any regular order you need to set it as enabled first. The AUTO T-STP is enabled by checking the box “Attach auto T-STP order to every order” which is located at the bottom-left of the ‘Misc’ page of the Global Order Entry Settings window.

2.      So then, an Auto-T-STP order is sent as soon as any portion of (or the entire) SHORT 1000 shares of INTC order is filled. If the price of INTC rises to $1.00 above your SHORT order fill price of 27.27 (to 28.27), then your AUTO T-STP is immediately triggered to BUY 1000 shares of INTC at MKT. If the Last Price of INTC were to drop  to $0.25 lower than the $27.27 limit price of your SHORT order, (i.e. to 27.02), then your Trailing Amount is computed off of that new Price. So if the Price drops to $27.02, then the triggering price for the AUTO T-STP becomes $28.02. When the price of INTC rises to $28.02, your AUTO T-STP order is effectively triggered as a BUY 1000 shares of INTC at MKT.

3.      Note that cancellation of the original order (SELL 1000 shares of INTC at $27.27) will prevent the sending of any further Auto-T-STP orders for the non-filled portion of the original order going forward.