You need to register separately on the Chart Forum
- see Chart Forum Help
Edit Profile Profile Help Help
Forum Rules Forum Rules Advanced Help/Instructions Advanced Help
Search Last 1|3|7 Days Latest Posts Latest Posts
Search Search Forum Tree View Tree View
   

Safety stops and the flash crash

Chart Forum » Trading - Systems » Safety stops and the flash crash

««  Previous  Next  »»


 
Thread Start New Thread 
Last Poster Posts Pages Last Post
         

Author Message

Top of pagePrevious messageNext messageBottom of page Link to this message
gmcd
Member
Username: gmcd

Post Number: 1
Registered: 07-2010

Rating: N/A
Votes: 0


Thursday, July 01, 2010 - 11:50 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi All,

I am new to trading and am still in the early stage of researching the area before I consider trading for real. I've been reading Elder's Come into my Trading room as well as Weinstein's book and I've also been paper trading using Snifter's system.

These approaches stress the importance of using a safety stop which seems very sensible for those of us who cannot be at their computer all the time, however there also seems to be a danger when the markets drop rapidly such as in the case of the flash crash that occurred a couple of months ago. My understanding is that many trades were exited far from the stop loss point due to the markets dropping rapidly and some trades were exited after a 60% drop in price. I was wondering if any of you take steps to minimize the risk of being caught in such a situation and yet still get the benefits of having a stop in place (perhaps using limit orders?).


Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 233
Registered: 03-2010

Rating: 
Votes: 1


Friday, July 02, 2010 - 06:31 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)




gmcd wrote on Thursday, July 01, 2010 - 11:50 am:

These approaches stress the importance of using a safety stop which seems very sensible for those of us who cannot be at their computer all the time, however there also seems to be a danger when the markets drop rapidly such as in the case of the flash crash that occurred a couple of months ago.




gmcd- you,being from Toronto,need to find out about your local brokers and what they offer in the way of 'disassociated' stops.

Here in Oz we also have these things called Kangaroo Tails.
These are more predatory than Flash Crashes which are said to be 'only' Computer Glitches.

Kangaroo Tails are much more 'devious'.They are Stop Loss Raids when some smart alec sells down the Market Depth Line for the purposes of activating Mechanical Stops to Buy Cheaper more than had to be sold to Activate said Auto Stops.Result is the day job worker comes home to their shares have been sold,yet the Close Price was above what they sold out on ie you been Took.

Now this is a Fancy Ploy usually done on A Goer of a Share in a Bull Market but I won't go into more with an Elder Educated Devotee from Canada.

Suffice to say,perhaps,that IF you are not set up to Screen Hawk all day as a Full Time Trader?

well,the only shares that a broker will activate an Auto Stop on are highly liquid and usually not highly volatile.What we call here Blue Chips/High Market Caps[at least over $1billion]

If you wish to Trade in High Volatile Shares and yet still keep a Day Job[ie not be on screen]?
Well,it's probably best that you operate a Mechanical Stop Loss which is you react the next days open to sell by your own[Not Broker Order] decision overnight.

Now,gmcd,If you go with Blue Chips?Well if they Plummet in a Day?it's because,usually,that their Fundamentals took a hit News Wise.
I don't know what Elder has advocated re FA but,gmcd,if you trade in what are basically FA Blue Chips?well it's pretty dumb to know nothing let alone CARE about Fundamental Drivers of Share Prices.

Anyhow,basically there's not only Flash Crashes to worry about but concerted efforts by spivs to sting auto/broker stop activation.
d'Advice is to Do Your Stops Yourself and not rely on some Broker Generated System.

Happy trading.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Top of pagePrevious messageNext messageBottom of page Link to this message
breaker_1
Member
Username: breaker_1

Post Number: 208
Registered: 10-2009

Rating: N/A
Votes: 0


Saturday, July 03, 2010 - 12:10 am:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Jaded,

Would thus be an example?










When one door closes another door opens; but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.

Alexander Graham Bell





Top of pagePrevious messageNext messageBottom of page Link to this message
jaded
Member
Username: jaded

Post Number: 234
Registered: 03-2010

Rating: N/A
Votes: 0


Saturday, July 03, 2010 - 04:40 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A Stop Loss raid needs to be Confirmed,breaker.Usually by a higher opening the next day.So your example DWS is not so good.

There's an alternative reading of a Raid Candle.That's that someone is really keen to sell and took an opportunity to sell a appreciable number.When that lower wick formed Buyers came in and bought the shares back up.

Complicated,hey breaker?Basically you have to be On Screen when the Deed is Done and take note of Time it takes for the share to go back up after the Raid.
Longer it takes the more likely it's not NOT a Stop Loss Raid but an Eager Seller.
As an aside,eager sellers can exhaust available buyers causing the share to drift down to the base of that candle and below.

If I held this breaker I'd be contemplating that with an eye to Stop Loss activating myself.Thursday's Candle could be a Topping Sign especially with it's Volume and that Friday only consolidated below Thursdays Close.

check it's 6 month chart for if it's in Run Exhaustion?

cheers.


" Hear what you Say...
But see what you Do!"

Sir Zelman Cowen c 1970.

Add Your Message Here
Post:
Bold text Italics Underline Create a hyperlink Insert a clipart image

Username: Posting Information:
This is a private posting area. Only registered users and moderators may post messages here.
Password:
Options: Enable HTML code in message
Automatically activate URLs in message
Action:

 
Other Threads  
Last PosterPostsPagesLast Post
Can you make monely trading for dividends?blumenei03-Sep-10  07:41 pm
Brokersblumenei03-Sep-10  07:38 pm
Market Mechanism Changesblumenei51 10 04-Aug-10  05:28 pm
Gary Stone's Sharewealth Systemspaulh19-Jul-10  06:09 pm
Trading using MA'sdanielc01-Jul-10  10:58 am
Advice on stock picking system please.ken16-Jun-10  09:54 pm
Momentum Tradingalex_lyall44 14-Jun-10  06:39 pm
Difference between softwaresalex_lyall21 25-May-10  06:18 pm
The "Loan Shark" Methodjaded26 17-May-10  09:06 pm
Profit takingbreaker_111-Mar-10  02:57 pm
Safety In the Market ABC trading scanmaittlen09-Mar-10  06:26 pm
Trading structuremassner11 26-Feb-10  01:30 am
Please review my trading system!ninja01-Feb-10  10:30 pm
I have a plan!easymoney32 28-Nov-09  10:09 am

Threads by Last Post Time:

First Previous 0 1 2 3 4 5 6 7 8 9 00 01 02 03 Next Last

Administration Administration   Log Out Log Out    

««  Previous  Next  »»