2+2 Stock Trading Competition

[wildwood]

Hi Zephed,

Here is an example. Say you buy stock at $10 a share. You can set a stop loss below the market. Let say $8 stop loss. If the stock trades at $8 or lower; your stop loss immediately becomes a market order to sell your shares at the current market price.

Now let's say you have a profit target of $15 for the same stock. You can enter a limit order to sell at $15. This order will only be executed if the market trades at $15 or higher. You are guaranteed to get your price IF the limit order is executed.

[Rob Blackburn]

Are the executions of the orders super slow?

I tried to place orders when WPTE was having late day fluctuations trying to grab some profit. I placed the orders and still like 10 minutes later the trades were pending so I kept having to backout so I didn't get wacked.

[zephed]

[ QUOTE ]
Hi Zephed,

Here is an example. Say you buy stock at $10 a share. You can set a stop loss below the market. Let say $8 stop loss. If the stock trades at $8 or lower; your stop loss immediately becomes a market order to sell your shares at the current market price.

Now let's say you have a profit target of $15 for the same stock. You can enter a limit order to sell at $15. This order will only be executed if the market trades at $15 or higher. You are guaranteed to get your price IF the limit order is executed.

[/ QUOTE ]
So I can have both operations simultaneously working on a single stock then. Thanks!

If I want to sell at a lower bound (I understand it doesn't sell at exactly that price always), I use the sell + stop action.

If I want to sell at a certain upper bound, I use the sell + limit function.

That makes sense. I'm a retard.


Also, you say IF the order is executed. What sorts of events will cause a stop or limit order to not be executed?

[wildwood]

Hi Zephed,
On your first question: As long as the brokerage allows both orders. Certain situations can arise here. Suppose you bought stock at $10.00 ,entered a stop loss at $9.50 and a limit order at $11.00. Now let's say the stop dropped to your stop loss price and your stock was sold, then rose to your limit price before your limit order was cancelled. You could wind up selling stock you don't own. Not likely, but possible.
On your 2nd question, let's say you and 10 other people have limit orders to sell 100 shares each xyz stock at $15.00 That's a total of 1100 shares. Now let's say the market rises to $15.00 and trades 500 shares at that price and then reverses and falls back to $14.00. You can see that 600 shares will not get filled at the limit price unless the stock goes back up.

[Dan Mezick]

Anyone can jump in right up to the last day. July 5 was the start date and NOT a deadline.

The plus is you take on no "risk" before you sign up and take positions.

The cons are that others get a running start.

Anyone can participate at any time.

[OrangeCat]

[ QUOTE ]
Are the executions of the orders super slow?

[/ QUOTE ]


The delays built into VSE (Virtual Stock Exchange) make it difficult to capture quick intraday moves. The trading rules on the VSE site says:

Market Orders
We strive to execute all Market orders within 2 minutes after placed. It is possible that, during periods of extremely heavy trading, the orders may be delayed slightly longer than 10 minutes.

In my experience it was more like 20 minutes before receiving confirmation of a market order. This was for a few hundred shares of moderately active NYSE issues (around 1 mill shares/day).

[Sniper]

[ QUOTE ]
A good analogy is talent in a sport

[/ QUOTE ]

I don't think sports analogies work well when compared to trading or poker, as you can't for example put yourself on a rack and stretch yourself into a 7 foot basketball player, even if you wanted to.

[ QUOTE ]
While it's certainly not a 'good' mindset to expect to lose, expecting to win-- immediately-- may point to a desire to get something for nothing.

[/ QUOTE ]

There is a big difference between having a burning desire to succeed and having a winning midset vs thinking your going to win BIG immediately. To quote Colin Powell: "There are no secrets to success. It is a result of preparation, hard work and learning from failure."

[ QUOTE ]
It's like an intern surgeon expecting to perform flawlessly in his first 100 operating room experiences. This can happen to talented individuals, but such talent is rare.

[/ QUOTE ]

I don't know about you, but I certainly wouldn't want my surgeon going into the operation with the mindset that he was going to botch it up [img]/images/graemlins/wink.gif[/img]

[ QUOTE ]
The issue of "innate trading talent vs. trader training" is the focus of the Turtles

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The turtles are a great example of how anyone with the right training and a good system can perform well.

[OrangeCat]

Zephed,

What wildwood explained is how it works in the real world. The VSE (Virtual Stock Exchange)is a little different. The trading rules on the VSE site says:

If a VSE user in the Individual Competition was interested in buying stock in Company X, and Company X has a trading volume of 100,000 shares at the time the user was placing a trade, the VSE user would be able to buy up to a maximum of 100,000 shares.

If real life, buying a 100K shares of X would significantly affect the price. But it appears VSE will fill the order using the last price as long as the current total volume that day is sufficient. Another way VSE differs from real life is stop orders. If you set a stop loss, a market order to sell is entered when the price is hit. The price you are filled at could be way below the stop price. If a stop limit order is used the order might not get filled at all. It appears the VSE will treat stop limit and stop market orders the same as long as the size of the order is less than or equal to the current total volume that day.

My point is that the VSE does not function like the real world when trading large blocks of low volume stocks. This is a "feature" someone could use to their advantage in the contest. I’m not complaining about it, just making people aware of the differences since this is supposed to be a fun learning experience. Anyway, as I said earlier, I’m making selections as I am in real life regardless of what others do in the contest.

[Dan Mezick]

...to a certain extent.

[gvibes]

[ QUOTE ]
I have decided that I will put all my money into a single highly volatile stock, and hope that either puts me in first or last (I want some sort of bragging rights).

EDIT: I bought ~240000 shares of INB, a pharamceutical company that has gone down >40% in the last month, and set a 52 week low today. It has nowhere to go but up!!!

[/ QUOTE ]

This software sucks. I put in an order for 240000 (I thought), and it only bought me 400 shares. It's already up 17% too. Probably has to do with low trading volume.

So I'm putting all my money into some other, random, crappy company.