14 AlgoX N8 Using The Sticky Stop Feature

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Execution and Management Algos are designed in a way that a trailing stop can only

be moved in a positive direction. Hence, once a stop is improved under one of these
two Algos, it will not revert back to its former location but rather will only move
forward in the intended or expected direction of a trade until hit or cancelled. Many
profile elements, however, can move both in the direction of a moving trade or move
back in the direction of the original entry. We observe this in the movement of Value
Area boundaries, the VWAP, the VPOC, a Profile’s Cluster or the CWAP. Because
these Profile elements can and do move in both directions, changing the boundaries
of an Active Profile can change a stops location either backward or forward.
This is where the Sticky Stop feature in the AlgoX Interface comes into play.
Because when either the Execution Algo originally places a stop, for example at the
bottom of Value, activating the Sticky Stop attaches the stop to that location as it
moves with the market. Hence, if the entire Value Area moves up due to heavier and
heavier volume as a trade develops, the stop moves up with this Profile Element. If
left in this mode, the stop will also move down toward its original location if the
market turns and there is heavy enough selling volume to move the boundaries of the
Value Area back down before the target or the stop is hit.

The next chart illustrates as the profile develops the VLP (Value area low price) shifts
down by 1 tick. As the stop is currently attached to this profile element it adjusts to
this value; since the sticky stop setting is enabled.
Use of the Sticky Stop requires patience and practice to become comfortable in its
use. It is not some that a novice trader new to order flow trading is going simply to
slap onto a chart and use well intuitively. Once there is a firm base of experience in
using Volume Profiles, a trader can consider how use of the Sticky Stop might
improve his or her trading edge.

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