Alerts & Risk Management

StreetSmart Pro® provides Alerts with the option to trigger an order when the alert criteria you set are met. Conditional orders can be incorporated to accommodate specific investment strategies and manage risk.  

StreetSmart Pro can help you achieve risk management using Alerts with Conditional orders or by placing Stop or Stop Limit orders. Below are examples of how risk can be managed once a position is established.

Alert with a Conditional Order

• An alternative to submitting a Stop or Stop Limit order is setting up an Alert with a Conditional Order. Using this type of Alert will also allow you not to show your order to the marketplace until your risk threshold has been reached. It also allows you to set both a Profit exit and a Loss exit that would trigger an order to close your position if either are reached.
• To create a loss exit, if you are long a position, create a condition using Bid decreases to as the criterion. You may also choose to use a Bid loses _ Points or _% providing more flexibility than what is available using a Stop order.  If you are short a position, you can do the same using an Ask variable.
• To create a profit exit, if you are long a position, create a condition using the Ask increases to as the criterion. You may also choose to use Ask increases __ Points or __% providing more flexibility than is available using a Stop order. If you are short a position, you can do the same thing using the Bid variable.
• Be sure to select the Or radio button at the top of the second condition if you are including both a loss exit and profit exit in you conditional order.
• NOTE: While you can use this type of Alert to help with risk management, it is only similar to a Stop order if you select Enter Order as one of the Actions.  If you choose not to Enter Order, the Alert will still let you know when your risk management threshold has been reached, but you would have to enter a new order from the Trading window to minimize your risk exposure.

Alert With Conditional Order using Trailing Stop

• The functionality is very similar to the Alert with a Conditional order.  The difference is that you now have a variable trigger (Trailing Stop) which will become effective only after the price of the security has had an up tick.
• NOTE:  If no up tick occurs when using a Trailing Stop, the Conditional order acts like a Stop order, as there is no price increase to 'Trail' back from.
• To add a Trailing Stop to your Alert, check the Trailing Stop box.  This box only becomes available when the criterion is either gains or loses.
• EXAMPLE You are long 1000 XYZ, which was purchased at $20 per share. If you have a risk threshold of 10%, you would want to get out of the position if the bid for XYZ decreases to $18 per share at the time you purchased it, or 10% less than highest price reached after that.  
  
  You enter a Trailing Stop Alert at $20 to fire when the Bid loses 10%.  Assuming the stock price then increases to $25 per share, the Trailing Stop will trigger if the Bid then decreases to $22.50 per share. $25 x 10% = $2.50 per share. $25 - $2.50 = $22.50 per share.
  
  If the stock never moves above $20 per share and you set up the same type of Alert, it will only fire if the Bid loses 10% ($18). $20 x 10% = $2. per share. $20 - $2 = $18.
• You may also enter Trailing Stop orders from the Trading window by sending a SmartEx Trailing Stop order type. This will display the conditional order in the Order Status tab until the trailing stop condition is met and the order is sent and becomes an Open order. Alerts with Conditional Orders using a Trailing Stop will display in the Alerts tab. Use either method of setting a trailing stop depending on your needs and preferences.

NOTE:  When placing a Conditional order where the order action is Close and where you specify a certain number of shares to trade, if the tradable quantity of your position is less than the specified number, the software will send the order for the lesser amount instead of not sending the order due to insufficient shares available to trade.

EXAMPLE  You have 700 shares of AAPL with a trailing stop active that will close 1000 shares if the bid loses .05 points. When the bid drops .05, a SmartEx market order for 700 shares will be sent, as opposed to the software trying to send 1000 shares and erroring out because you do not have sufficient shares to cover the trade.