beta feature : AutoTraders: do not open trade if price not met
I really really like that collective2 has put focus on this, reducing slippage cost with low liquidity assets could make a big difference for trade systems that work with these.
I am using collective2 to generate signals to my subscribers (for the time being only myself, building track record until someone notices how awesome I am)
Market orders put in before market is opened:
With equities, I prefer to get in on the at open auction on the exchange as this enables me to put in the trade inside a fairly large time window before mkt opens, and because that the at open auction trade usually have some attention and liquidity from market makers.
However, at collective2 it seems like their trade-bot puts in trades entered before market open as “algorithmic something something” and these orders tend not to end up in the open auction, but hit the market just after or just before, getting me interesting (and usually not so interesting) fills.
I would suggest that a market order entered before the market opened should go into interactive brokers as a market order, or that the trade leader has a choice of either algo or market, I would assume then, that market orders actually hit the at open auction.
scaling in and out:
I usually scale in and out of positions. I try to calculate the lowest number of shares I can trade, before fees go below the fee minimum at the broker. When I have calculated number of shares, I then trade that number of shares into the at open auction, and do that for several days. This makes it not possible to use the new feature, unfortunately, as I enter many small orders over several days.
when I scale out, I have two modes of operation. one: I have a price target on the stock, that I expect the stock to cross on the way up, I put in a limit sell for all the shares.
This limit sell would benefit enormously if it could be “locked” so the collective2-trade-bot don’t start using market orders.
I suggest if we were able to , for instance, put in “for rest of day” or “for N days” and then collectiv2-bot-magic would let the limit hang there for all copiers until filled or the time has passed.
If it is an illiquid stock and a thin market, it could take some time for the market to work through a lot of sell limit orders at some level, certainly more that a few minutes.
collective2-trade-bot Converting to sell market would potentially move the stock down a lot, esp. if market makers sniff out what’s going on. move the stock down and hit the copiers with a bad loss.
The other scale-out mode of operation is if my target is suddenly below current price. Then I use market open sells like when I scaled in. With brokers that keep track of the individual buys, I just market sell individual buys, once a day. with IB I sell in portions that minimize fees, same as when I scale in. this - again - gets me into trouble with collective2 bc trades there often does not hit the auction bc they are tagged “algo something or the other” I really like the use of IB’s algo trades, but not with market orders entered before the markets started.
So… this was feedback to collective2 and others… I am very curious - how do other trade leaders try to minimize slippage?