Nasdaq to Cancel Trades

peilthetraveler · May 6, 2010

Quote from krazykarl:

The first 10 minutes tomorrow are going to be nuts.

Japans stock market is already getting hosed right out of the gate and not gaining any ground in the last 90 min. Down about 400 points already.

sappjason · May 6, 2010

Hey Ghost,
Any pointers on where I can get more educated on "bust out" levels for various US equities exchanges? I did very well today (+$24k) and I've reviewed all of my trades that took place in between 2:40 and 3:00 and it looks like I'm in very good shape. But, for future reference, I would love to understand these "bust out" levels better.

Thanks,

Jason

Quote from Ghost of Cutten:

Of course they prefer that in hindsight. But they chose to sell at the *market* - not at the price of their choosing. It is completely unfair that the people who sold at the worst prices - demanding liquidity at the worst possible time - get to avoid any losses, whilst the people who sold earlier get hosed, and worst still, the people who stepped up to the plate to buy get screwed and are not only out huge $$$ but are naked short from -59%. Imagine losing 59% of your capital in 30 minutes because you bought the low of the day when no one else provided liquidity - just because some pen pushing bureaucrat let a precious algo trader or I-bank desk monkey sweet talk him.

The people who used stops and got bad fills? Fuck them, they caused this crash with their dumb trading.

All I can say is I feel lucky that I actually read exchange regulations so I know i) what the bustout ranges are ii) to never close out a position that you got outside the bustout ranges, until they confirm at the exchange that it's not being busted.

This is corrupt as fuck basically.

Lojanica · May 6, 2010

Quote from trom:

Ahh yeah...like a 60% envelope. It didn't occur to me that anything was actually going up at that point in time...

You could just place all your trades at 60% and wait for a black swan...........Chachacha CHING!!!!!

There is no perfect system except taxes, a big military, wink wink back room deals, and OPM.

It's always the same those without a voice get a fistful of d I mean fisted by d.

Ghost of Cutten · May 6, 2010

Quote from sappjason:

Hey Ghost,
Any pointers on where I can get more educated on "bust out" levels for various US equities exchanges? I did very well today (+$24k) and I've reviewed all of my trades that took place in between 2:40 and 3:00 and it looks like I'm in very good shape. But, for future reference, I would love to understand these "bust out" levels better.

Thanks,

Jason

The exchanges usually publish them on their website somewhere, either search for it, or call them/email them and ask for the link.

I definitely recommend you read the bustout limits and all rules very carefully. I personally print out the %/price limits so I know once it's in the danger zone of a potential bust. Once it goes beyond that limit, don't exit your position until you know what's the exchange decision. If it's just one stock I recommend calling them asap to query it. If it's a market crash like this, you'll just have to wait till they make a decision. I keep the printouts in a file by my trading desk, along with emergency numbers (e.g. exchange contact numbers for checking trade busts; broker phone numbers etc), for exactly this kind of occasion.

Also you need to use a bit of common sense. For example if something is down 50% and there's no news reason for it, there's a good chance it will get busted. Today's decision to allow 60% down trades to stand is pretty unusual in terms of how wide it is.

zdreg · May 7, 2010

common sense is overridden by greed/frear. nothing new.

VoodooMMI · May 7, 2010

Quote from Ghost of Cutten:

Of course they prefer that in hindsight. But they chose to sell at the *market* - not at the price of their choosing.

I agree. A "market" order to sell is an order to sell at the highest price available at that moment, even if that price is extremely low. The simple solution is to get rid of market orders. Of course that is extremely unlikely to happen because the institutional firms make a lot of money off the retail traders' market orders. The reason I never use market orders is that I want to determine the price that I'll sell at and not let someone (or something) else decide at how low of a price I would be willing to sell. But what about "stop" orders you say? Use a "stop limit" order instead with one price for the stop and a different price for the limit (i.e. sell 1 ES with a stop of 1100 and a limit of 1090). Are you guaranteed a fill? No, but you need to be aware of the limitations of your orders. Perhaps a better alternative would be to already be long a protective put. Or even more simply, just be flat. If you are already flat, you may even want to put in a bid and try to scoop up some bargains.

May 6th, 2010 is a perfect example of why you need a trading plan. You need to plan what to do, or not do. In extreme circumstances, that's when you need your plan the most. On May 6th, 2010 the ES futures fell about 6% in a few minutes. What if it had fallen 10%, 20%, 30% or more in a few minutes, what would you have done? Will you plan cover all scenarios? Probably not, but the more scenarios you have covered, the better.

Aisone · May 7, 2010

Have people's potentially busted trades been processed by IB yet??

I have 3 positions I bought <60% during the timeframe that look eligible, but they are still in my account.

I've done this long enough though to know not to have sold these for a profit. The buy gets busted and I wind up short well below the trading price. I'll hold them until I know for sure they are mine (which they probably aren't.)

/edit: n/m, looks like I miscalculated and I get to keep them...very nice day yesterday.

zdreg · May 7, 2010

Quote from VoodooMMI:

I agree. A "market" order to sell is an order to sell at the highest price available at that moment, even if that price is extremely low. The simple solution is to get rid of market orders. Of course that is extremely unlikely to happen because the institutional firms make a lot of money off the retail traders' market orders. The reason I never use market orders is that I want to determine the price that I'll sell at and not let someone (or something) else decide at how low of a price I would be willing to sell. But what about "stop" orders you say? Use a "stop limit" order instead with one price for the stop and a different price for the limit (i.e. sell 1 ES with a stop of 1100 and a limit of 1090). Are you guaranteed a fill? No, but you need to be aware of the limitations of your orders. Perhaps a better alternative would be to already be long a protective put. Or even more simply, just be flat. If you are already flat, you may even want to put in a bid and try to scoop up some bargains.

May 6th, 2010 is a perfect example of why you need a trading plan. You need to plan what to do, or not do. In extreme circumstances, that's when you need your plan the most. On May 6th, 2010 the ES futures fell about 6% in a few minutes. What if it had fallen 10%, 20%, 30% or more in a few minutes, what would you have done? Will you plan cover all scenarios? Probably not, but the more scenarios you have covered, the better.

"the simple solution is to get rid of market orders.

you are correct it is a simple solution. it it simple and wrong. It is a tool like any tool. It is a like a knife. if u don't know how to use it you will hurt yourself.

do have any other solutions to level the playing field in investing or elsewhere?