Have you ever had a problem closing your short position?

[schizo]

Did you trade it? It was absolutely crazy.

Yup, I was there on the day of 9/11. I was there actively trading as the Lehman's downfall was announced on CNBC. I was even there on the day of Flash Crash (although I was luckily out of my position).

Frankly, I could care less if anyone believes it or not. roll your eyes until the cows come home, lol.

I'm not suggesting that you're making this up. As I said, freak accidents do happen at times. What I was thinking was more in line with "dude, why didn't you sue your broker?"

 

[Bad_Badness]

Yup, I was there on the day of 9/11. I was there actively trading as the Lehman's downfall was announced on CNBC. I was even there on the day of Flash Crash (although I was luckily out of my position).


I'm not suggesting that you're making this up. As I said, freak accidents do happen at times. What I was thinking was more in line with "dude, why didn't you sue your broker?"

Thanks, Sorry if I it came off negative.

Yeah I thought at first, crap! What is my recourse I could take. Then I kept on trading, even while I was on vacation with the wife. It was then that I decided large overnight positions while traveling is not such a good idea!!!! I ended up doing well, but felt pretty bad that I was working while the wife was drinking cocktails alone, no matter how much money was to be made.

Oh yeah, the flash crash, I totally forgot about those. Fortunately, I have not been in any of those. I guess for those, perhaps while you are still wondering WTF, it can recover. But I would hate to be one of those MKT stops, that just happens to get filled at close to the maximum worse case. I.e. the MKT gets filled when things slow down enough for it to fill. When does that happen? Well I suppose, when the "fat fingers" or "contracts instead of dollars" mistake actually gets filled, i.e. the worse place.

Hey Schizo, did you see the three days before the 9/11 and how it just went dead, and stayed at the level of a test support. I kept on wondering if I had missed some FOMC meeting schedule or something. So I just went 2x short NQ and ES, and then some contracts short. Then on the recovery, reversed and bailed out within an hour. Call me chicken, but I made enough on the long side and was basically too shell shocked to trade anymore for a few days.

I really don't know if I would be any better today. Sometimes those things seem like, "Watch in awe, don't trade. Remember dude, you are RETAIL".

To the OP, sorry for hijacking the thread, but I hope the candid discussion helps you get insight on what can happen and how you can end up flat at the worse possible situation, or how delays can not only hurt the PL, but how it can mess with your head.

 

[john7722]

To the OP, sorry for hijacking the thread, but I hope the candid discussion helps you get insight on what can happen and how you can end up flat at the worse possible situation, or how delays can not only hurt the PL, but how it can mess with your head.

No problem , interesting discussion . I think I remember reading about some fat fingers or whatever it was in foxer with swiss franks where traders lost almost everything and coudn't get out until it was too late . About 10y ago?

Anytime I am shorting something I have that feeling someone wants to fuck this up for you . It hasn't happen yet but I could have been on the short side of AMC , GME but at that time I was doing only long positions.

 

[JamesJ]

No problem , interesting discussion . I think I remember reading about some fat fingers or whatever it was in foxer with swiss franks where traders lost almost everything and coudn't get out until it was too late . About 10y ago?

Anytime I am shorting something I have that feeling someone wants to fuck this up for you . It hasn't happen yet but I could have been on the short side of AMC , GME but at that time I was doing only long positions.

It was swiss national bank abanding eurchf floor of 1.20, markets in chf literally disappeared in a second and there were prints down to 0.80... it took hours before it became orderly again around 0.95-1.05.

As someone pointed out even MKT orders in futures and stocks dont get immediately executed in a 9/11 or lehmann or covid scenario. The problem i met there were broker side risk checks that are not prepared for this. I had orders sitting idle or with off market limit because of this with IBKR because their price algo capped it or held it back (even MKT orders), when there were wild swings or gaps.

 

[Bad_Badness]

The problem i met there were broker side risk checks that are not prepared for this.

This is a huge part of the delays. There are potentially 3 or 4 risk checks done before you hit the exchange.

 

[alistera]

Hi, I 've been taking a lot of shorts positions lately on all kinds of stocks from 1B to megacaps.
Average open position for a single trade is usually around $20,000.

Sometime I leave it open for weeks sometimes it is closed the same day .
I am however worried that sometimes I would not be able to close it at a reasonable price due to some manipulation or news where the stocks keeps going up way to fast .

I was lucky enough to own CAR when it shoot up like 200% in matter of minutes. If I was short would I be able to get a reasonable fill if those kind of crazy situations?

Another problem is overnight short position . Some companies are really shitty but the can often go up 50-200% overnight based on some idiotic fake news.

I 've been thinking about using puts but they seem to be more expensive in down markets .

How do you deal with a potential short squeeze or some other unexpected event?
Even if you just put 5% of your portfolio in 1 short trade, 500% increase overnight can be devastating.

thank you for help

Presume you don't know that a short position has 10x magnification of a long position for profits.

"I am however worried that sometimes I would not be able to close it at a reasonable price due to some manipulation or news where the stocks keeps going up way to fast . "

The simple fact is you can't, at some point the markets will cause a complete capital haircut, and will wait until you are most vulnerable usually when you're sitting on extended profits with your eye off the ball.

"How do you deal with a potential short squeeze or some other unexpected event?"

You only place enough so that you can sleep at night, or you don't sleep, or you move to assets such as stocks which close overnight netting your position down to offset gap opens.

In the end there is one simple answer, compounding on an exponential curve, if you keep 20% or 50% of the profits over the duration on above trend returns, you've done well, keeping 80% of the profits above trend is a dream very few can achieve, if everyone is talking about trend returns of below none of this applies, but that's not what you're doing!

 

[NoVoodooHere]

Seen too many head rippers to short anything but liquid index funds or macro futures