Advice with buy stop please!

I have just started trading, and I am using ETXCapital with MT4.

When I try to place a buy stop order, there is a message saying that “Open price you set must differ from the market price by at least 20 pips.”

But I thought that traders sometimes place buy stops / sell stops at 1 or 2 pips above/below a candle that has just formed. How could I do this?

Also, stop losses have to be set more pips away than I sometimes require. Are all brokers like this?

Today, I placed a buy stop order at 1.52022, with a stop loss at 1.52002. I know that the stop loss was much too close, but… the price was below these values, then definitely did not reach 1.52022, but stopped me out with a 20 pips loss. Lucky this did cost me much. I thought the idea was to reach the entry price first.

Could anyone please help?

Cheers,
Dave.

Cheers,
Dave.

I think you should study more on how to use Stop orders. When place buy stop orders, setting stop loss and take profit could be a challenge for beginners because theyve not fully understood its concept.

Absolutely bizarre. I’ve never heard of such a thing, and would be astonished if that’s normal at ETX (it certainly wasn’t when I used them).

Indeed - certainly.

1.52022 and 1.52002 are [B]two[/B] pips apart, Dave, not 20 pips apart. The fifth decimal place on GBP/USD is a “pipette”, or one tenth of a pip. That’s surely far too small a SL for a Cable trade?

I’m wondering (but far from sure) whether a confusion between pips and pipettes somehow underlies your confusion on this point? Are you entering your SL as a number of pips or as a price level?

Yes, it was only 2 pips, that was a mistake. But I am still sure that the buy stop value was not hit first, in fact the value was not hit for many candles afterwards.

Anyway, as regards the message on the order ticket I mentioned, I am including a screenshot here (hopefully) so you can see the message. Hope you, or anyone else, could help, as is it a BIG problem. I guess I had better actually e_mail ETXCapital, and tell you how I get on, but it would be nice to know if anyone else has witnessed the same thing.

Regards,
Dave.


PS you can just see it at the bottom of the order window, or if you zoom the screen you can see it clearer.

Lexy - Yes I thought it was bizarre too, but then I am new.

Pathfinder - I have copied Investopedia - DEFINITION of ‘Buy Stop Order’

An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.

I thought you could then set a stop loss as you would with the offering price??

Read more: Buy Stop Order Definition | Investopedia Buy Stop Order Definition | Investopedia
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MT4 often measures pips with a different decimal position.

Example:


As shown in the above image, I measured the height of the EUR/USD candle for Sept 29 2015 with MT4 on the left and FXCM’s Trading Station on the right. As you can see, the MT4 measurement is 853 pips and the FXCM measurement is 85.3 pips. The “20 pips” your MT4 entry window is speaking of may actually mean 2 pips.

If you right click your chart in MT4 or hit F8 you will get the following window:


Try selecting the “Show Ask line” option. When you do, you should see a new red line with a price on the end of it like this:


MT4 charts are ALWAYS bid charts. The prices you are seeing are the bid prices. The current bid price is the price at which you can sell. The price at which you can buy is higher than that and when you select “Show Ask line” you get a line that shows you where the current ask price is. In the example above, the bid is 1.12501 and the ask is 1.12533. Thus, the difference between the bid and the ask (that difference is called the ‘bid/ask spread’ or the ‘spread’) is 3.2 pips (1.12533-1.12501=0.00032).

So your MT4 order entry window is probably telling you that your order to buy needs to be at least two pips higher than the current bid price in order to be at or above the current ask (which is the price that matters when you are buying). I know it says “20 pips” but it means 2 because it is using a different decimal position. Yes that is annoying and I am not really sure why MT4 is like that, I simply have not bothered to find out why.

IMPORTANT: When you placed an order in MT4 to buy at 1.52022, only the ask price needed to hit that level to trigger your order. Your bid chart may show that the price never struck 1.52022 but that is because your chart is a bid chart, all of the prices on that chart are bid prices and the bid may have never gone as high as 1.52022. So your buy stop was triggered and filled but the bid price never got as high as your entry level. Then, the bid price hit your stop loss at 1.52002 and you were out with a 20 pip loss.

Every time you get an order filled, you start with a drawdown as big as the spread. When your order to buy at 1.52022 was filled, the bid was at 1.52020 or perhaps lower and thus if you closed out the order at that moment you would have lost 2 pips.

To familiarize yourself, pull up a minute chart in MT4 and select “Show Ask line” and watch the bid and ask prices move together for a bit. Depending on your dealer, you may notice the spread get wider and narrower as the prices move.

Hope this clears up some of the fog.

May the forx be with you.

-Adrian

That would kind of “make sense” - thanks Adrian.

It certainly doesn’t make sense as it reads: just as Dave’s saying it’s a big problem, so would it be to countless other customers of theirs, and I can’t believe they could keep their customers by requiring buy/sell-stop orders to be 20 pips away from market. 2 pips, yes, that’s a whole different matter and would make sense.

I think Adrian [I]must[/I] be right, here, Dave?

Yes I think I see the light! But when it actually SAYS PIPS and not pipettes or points I thought it MUST BE PIPS!
I really think ETX should change the wording there to points, they use that term elsewhere.

But thank you both a million for helping and using your time, you are very kind.