Q&A by Don Bright
STOP ORDERS: A CONVERSATION
Who are the “they” who can see stop orders? I read a lot of comments about how “they” run your stops. I’ve always been curious about the dynamics behind this belief. I understand there are certain key price levels at which a large collection of stop orders are likely to be sitting (stop-loss orders for countertrend traders and orders to initiate or add to positions for trend-followers), and a party desiring to execute a large order to sell into strength or buy into weakness would do well to take advantage of the liquidity offered by all those stop orders turning into market orders.— NoDoji
DB: I suppose “they” would apply to the New York specialists for some of these orders. I say “some” because there are various ways to input stop orders. For hard stops on the Nyse, specialists are responsible, since they are subject to tight guidelines on how they execute and cannot summarily execute them at their own discretion.