Simulated Stop clarifying

[Arpad]

You state this in the Help:
A Simulated Stop order will trigger once the market trades at the predefined price and the volume is less than the volume limit.

Can you tell me why not once the volume is more than the volume limit?
Please give me an example from a real trading situation.
Why should I wait until the volume is less than a particular level as opposed to wait until volume surpassed a limit?

[NinjaTrader_RyanM1]

Hello Arpad,

The idea is to keep your order from the book until the volume is less than the level you specify. If price rebounds in the opposite direction before hitting your volume floor, you won't get filled and can take advantage of this movement.

[Arpad]

Please check my example and tell me if I got it right or not.
If I misunderstand it, please write a correct example, so detailed as mine.
Thank you.

I want to buy at market price once the price reaches 100.
I place a Buy Stop Market order with a stop price of 100.
I consider 100 as a reasonable price only if the volume is at least 500, so I set the volume limit to 500.

It takes 40 seconds to reach this 500 volume, and during this, the price first goes down from 100 to 99, then goes to 100 again, but still nothing happens, because the volume didn’t reach 500. Third, finally the price is 101 and the volume is 550, so my order is filled at price level 101.


Did I get it right?
Whether or not, I would appreciate if you could paste a link to a much more detailed description or video about this.
Thank you.

[NinjaTrader_RyanM1]

No, this isn't what the simulated stop was designed for. All documentation on this feaure is available here:

http://www.ninjatrader.com/support/helpGuides/nt7/simulated_stop_orders.htm

First step is to understand conceptually why you would use this and then the mechanics will be easy to follow.

Long entry at 100
Stop loss at 95
Simulated stop: 500 volume

1) Market trades at 95. Volume is at 600. No stop loss order submitted.

2) Market trades at 95. Volume is at 500. Your stop loss is submitted.

If market starts trading at 96 inbetween step one and two then you don't get filled and take advantage of this movement. This is where it is helpful.

If market trades through your price then the simulated stop loss is irrelevant and you will be filled.

[Arpad]

Question 1)
So if one tick is 0.1 and the price goes down to 94.9 (even it is only 1 tick below my stop price) my stop order gets filled at 94.9 regardless of the volume, whether the volume is smaller or bigger than the volume limit set by me?

Question 2)
Am I right?

In your example, you are in a long position, so your stop loss order is a sell order, hence the bid volume is monitored. Much bid volume (i.e. more than the limit you set) means there is a lot of buying power, so there is some chance that the price don’t go down further and instead turn and goes up.

If the bid volume is less than the volume limit I set, there is little buying power, so probably the price continue to decline, so it is time to fill my stop order at the predefined limit, at 95?


Question 3)
Is this method useful only for closing positions (stop loss) or also for opening positions?

[NinjaTrader_RyanM1]

1) Yes, if market trades through the price, then simulated stop is ignored. You're not guaranteed that price on the fill unless you use stop limit.

2)

If the bid volume is less than the volume limit I set,

Yes, this is what triggers the order.

3) You could use it for opening positions for the same type of scenario. If you have a buy stop order above the market: You don't want a fill if price retreats in the opposite direction. You're trading your place in line to help minimize being caught at tops or bottoms.