Limit stops... I don't think so!
Effectiveness of Stop Limit in a Mini Flash Crash
- Thread starter Gonzo86
- Start date
%%Thank you all for the diversity of answers! That's exactly what I was looking for. I'm still waiting to get flamed though. It wouldn't be a first post here without that.
I called it a "mini flash crash" but the correct terminology is stop running, as schizo mentioned. Now that I know the term I can search around and learn more. I'm trying to get a sense for how prevalent this is. I guess that only comes with experience.
I know I'm pretty much screwed in a real flash crash. I've learned about the circuit breakers. I still need to figure out a plan on what I'd do if I got stuck in a trade that got halted... any thoughts?
As a rookie, I'd love some suggestions for reading materials. I picked up a few "day trading" books but they're pretty unsophisticated and don't deal much with the futures market except a few mentions. I'm looking for books with a focus on the futures market.
IT would be real easy to get ripped off, in something like that. DONT Worry about that; ES,maybe , or UPRO .......would be better than SPY on margin, most likely...............................BUT really trade trade reasonable size, just in case+ personaly, i use common sense, cash sense.Some one panic sold intraday DVY, when it was doing average volume of 5 million a Week;= not me/LOL my plan forbids panic selling.....................................................Paper, printed charts help;flash cash looks like bad data on computer + some times it is.
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AND @ first glance 10% up moVe in QQQ intraday[all day] looks fake/bad data,LOL; but since i had the paper chart + it was bear of 2000-2002, i figured the moVe was real+ it Was.
Basically nothing. When the halt is lifted, the selloff will only get worse. But note that the circuit breaker is triggered in a time of major selloff and everyone wants to get out (or go short) at the same time.
Considering that since the limits were put in place after the 1987 crash, the breakers have never been tripped on the S&P version, you shouldn't really worry about this sort of thing. Unless you trade CME livestock.
No-no, uh-uh. There were many times when ES went limit down. I remember having experienced one or two during the 2008-09 crisis.
https://www.elitetrader.com/et/threads/es-limit-up-down.221392/
Well, if the OP has a >7% stop, I suppose he has enough cash on hand to not worry about it, and should just swing it in the breeze.
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WELL that meat market can be tough. LOL T Boone Pickens made ca lot of money in cattle oil/gas, but lost money in cattle futures............................................................
The initial level 1 circuit break trading halt occurs at 7 % for the equity indices using the cash closing price at 4:00 PM ET.
With the current closing price of the e-mini S&P 500 index - this means a 231 drop to the price 3320,50.
Looking at some data I have at hand - the real nasty down days happened in 08 and 2 others in 10 and 11. The largest maximum daily drawdown appears to be - 9,24 % the 15th of October 2008 - the day Lehman Brothers went bankrupt.
Looking at my charts though - I see no evidence of any trading halt and I was not trading myself at the time, so I can't say how it played out.
With the current closing price of the e-mini S&P 500 index - this means a 231 drop to the price 3320,50.
Looking at some data I have at hand - the real nasty down days happened in 08 and 2 others in 10 and 11. The largest maximum daily drawdown appears to be - 9,24 % the 15th of October 2008 - the day Lehman Brothers went bankrupt.
Looking at my charts though - I see no evidence of any trading halt and I was not trading myself at the time, so I can't say how it played out.
I don't remember the exact date (I think it was over the Marin Luther Jr holiday in 2009), but there was this dude who went long on Friday and he got absolutely crushed. Think he lost over $100,000 that day. Anyway, the selloff can be fast and furious. ES can drop 50 points instantly (that's equivalent to 500 points for DJIA) and there's no way you can get out of your position. Nobody will take your offer.
The Dow dropped 1000 points 2 years ago in a single day. 700 points in early Aug last year. Very quickly. You could have gotten out, because they were not locked-limit due to the percentage drops (which were mild in comparison to 12 years ago).