ComSec's "Might" Stop-Loss Facility
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     shawky
Member
Username: shawky
Post Number: 279
Registered: 11-2003Rating: N/A
Votes: 0
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| | Sunday, June 13, 2004 - 12:44 pm: |  
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Hi All
Another forum member (FredMFoley) emailed me last week after having a nightmare experience with ComSec and their stop loss facility. He happened across this forum and searched on topics for stop loss, catching my posts on ComSec.
I thought his experience and notes on the topic were well worth sharing, so after asking his permission am posting sections of that discussion below.
Truly hope it is of use to someone.
regards
Shawky
Please excuse me Shawky for picking on you about this but I'm mad with Comsec too.
In trying to sort out Comsec's stoploss I did a Google search and found this forum.
I only joined minutes ago so I don't know where to properly air my grievance.
The problem is that in the last few days Comsec have tightened up the spread between the trigger and the limit to a ridiculous degree. It will mean that your stoploss order will often not execute at all. The price will probably jump straight below the limit in the event of something like a poor company announcement.
I have three stops set and the limits are as low as Comsec would accept.
I set them all last night by going round and round in circles, each time raising the limit by 1 cent until it was accepted. (There is no other way to find the max spread between trigger and limit except by trial and error)
GTP Trigger $2.29 Limit $2.22
FWD Trigger $6.73 Limit $6.67
NCM Trigger $11.94 Limit $11.84
Comsec's own stoploss info states:
"Through CommSec Stop Loss, you would set a Stop Loss Trigger at $9.80 along with a Stop Loss Limit Order at $9.60"
Well that's not true any longer. You can't set that sort of difference.
In my last call to Comsec I said that the above example was misinformation, and they should change their web site spiel.
Comsec say you can't speak to the Compliance Officer and to put your complaint in writing to the Client Relations Officer.
I am about to do that but wanted to pass the infomation around in case others haven't yet discovered it.
Comsec are trying to blame the ASX but from my phone calls and correspondence I'm satisfied that it's Comsec's doing.
I have had several calls, and emails to and from both the ASX and Comsec, and if you are interested I will forward that info to you.
Cheers
Fred Foley
Hi Fred
I could not find the old thread on ComSec Stop Loss but sympathise with you. I would like to see the correspondence that you have received from the ASX and ComSec.
I was extremely careful when I first used the stop loss facility I can tell you in no uncertain terms, it is of no use to short term traders. Long term or EOD traders should stick to that, decide on EOD.
The major problem with the facility is the inherent and unpredictable delay between when your trigger price is hit and when the comsec system puts your order through. If it is put through instantly then a 2-5% gap is sufficient. However as the delay can be 10 minutes (or not even fire at all) the price could be anywhere, including above your trigger price.
My advice, don't use the facility. If you need the facility then consider E-Trade. Whilst I have not used it, some respected forum members have. I use ComSec Pro Trader Pro, for it costs me nicks but it seems E-Trade's system is more reliable too. ComSec preferred brokerage is better. I have said all this on the forum several times.
I now use CMCGroup CFDs and limit my trades to the ASX200 long and short with stops that work. You are still subject to slippage due to lack of volume, but your trade will get closed usually in about 20 seconds. You can pay a very small fee and get a guaranteed stop price. The cost of this turns out to be cheaper overall to the brokerage you might pay at ComSec or E-Trade.
The CMC S/W package is a bit clunky, and I use Pro Trader, whilst others use E-Trade or just web based sites to provided additional information.
Going on what you have said, I would give the Industrial Relations Dep a call, or the Consumer complaints or something. I think it is about time that ComSec copped a fine for what they are doing.
By all means, please post your info onto the forum, at least it will help you vent your spleen, and help save someone elses money.
Remember that the pros push prices down to trigger stops so that the price will fall further and they can accumulate on the way down. Also, with the general public trading more and more, liquidity becomes a big problem. Especially when all those mums and dads set the same stop. Fleetwood is a classic.
If you were on the inside you would find that the ComSec stop loss facility or other stop mechanisms were responsible for the crashes. Prices usually recover. A good stock rarely changes to a bad stock overnight.
FWD - Jan 29 - classic fall due to lack of pre existing buy orders when 20 or so automatic stops got triggered.
CTX - Dec 11, and I missed that one otherwise I would have bought all the stops I could afford. Rumour has it that the dive was caused by ComSec Stop Loss, so you can imagine that the ASX is getting tough with ComSec, so ComSec have to tighten up their system to prevent dives due to panic sellers using their stop facility.
That's about all I can tell you. Hope it helps, no real answers unfortunately.
Best of luck
Shawky
Thanks for your reply Chris
I read all the old threads about the delay, and slippage with Comsec's stoploss facility. If you combine that with their new restriction on the spread between trigger and limit it becomes even more likely that your stoploss will not execute at all.
I suppose, to be fair, that if everyone had a stoploss, then the system would "collapse" fairly easily, and that is the reason for tightening up - but what's the use of a stoploss that just doesn't work.
I will look into the other options you mentioned (etrade etc)
I did get all the information on CFD's a long time ago, looked into it properly, but didn't follow it up. I might now. (especially after reading that IC thread you posted me on CFD's, including your posts)
At the time I had one particular worry. I thought that in order for me to make money, others have to lose, otherwise where does the money I make come from. I thought that those who took up using CFD's would be pretty sharp, and I would be out-gunned more easily than if I stayed in the 'real market' where I could compete more against the mums and dads. However knowing that CFD trading is so closely linked to the 'real market' must mean that logic is flawed.
My greatest worry is the fairly likely advent of some new terrorist strike. I got hit fairly hard last time, and was hoping stoploss orders might save it happening again. (I finally bailed myself out after about a week, the worst possible time - but learnt a lesson). Next time I want to be out very early, or stay in. The threat still makes me reluctant to put as much as I'd like into the market now. As you said in the forum "it's hard work" and I don't want blow all my work overnight.
I have read the Best of the Best a long time ago, and my trading has been influenced by that, in particular Snifter's advice and information.
(I just cancelled my FWD and GTP triggers for the reasons you mentioned, ie what happened to FWD once before, and that good shares don't go bad overnight)
I made several phone calls to Comsec and the ASX, but these are the emails I received:
From Comsec:
Due to an ASX requirement, CommSec has a legal requirement that bounds the Stop Loss parameters that can be set. These vary from stock to stock.
These parameters have recently been introduced by the ASX to reduce the volatility in the market.
If you attempt to place an order that is outside the parameters set by the ASX and CommSec internal regulations, you will receive a vetting rule which will prevent you placing the order.
And from ASX:
Following on from your query about the stop loss facility provided by
Commonwealth Securities, I have spoken to the ASX Compliance officer who
deals with Commonwealth Securities about this matter.
A business decision was made by Commonwealth Securities to change the price
steps to ensure that they comply with maintaining an orderly market. ASX
did not make that business decision for Commonwealth Securities. Any
further queries, you should speak to Commonwealth Securities on 13 15 19.
In the end I rang Comsec one last time and was basically told - tough - that's how it is, and no I could'nt speak to their compliance manager.
Thanks for your help Chris
FredMFoley
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