Serious Question: Can Stops Fail In A Market Crash?

I feel for people who can not read or do not want to read Jack Hershey. Though I think you should read what he is saying. There is some valuable info in his posts. I do not trade the Hershey methods for anyone here thinking I am sucking up to him. I make quite a bit of money by simply reading the tape and fully believe unlike Jack that traders should not be in the market at all times. I digress.

Anyway I think Jack is on to something here about certain players permanently exiting the market on Feb 27. First of all there was a 70% one day move in the vix. This is an extreme event. Secondly many of the flipping, bullying, and tape fakery that oftens happen on the es and other markets got ran over on feb 27. Example: A simple doubling down technique works 99.9% of the time with enough capital to deploy the strategy. This strategy would mean a hedge fund or large trader buys 5 es contracts at 1435, then buys 10 es at 1434.50, then buys 20 es at 1434, then buys 40 es at 1433.50 etc. You get the picture. The trader then only needs a 1 point move back up to capture a profit in the trade. But what happens if the trader runs out of money and is forced into liquidation by margin calls. This I believe along with other similar strategies got taken to the woodshed on feb 27.
 
Example: A simple doubling down technique works 99.9% of the time with enough capital to deploy the strategy. .....This I believe along with other similar strategies got taken to the woodshed on feb 27. [/B]
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Feb 27 was the 0.01%.

The markets always win.
 
Jack Hershey... was that the Edmund Fitzgerald? :D

Sorry, interesting way of putting commentary. I had an unbelievable month thanks to Feb 27:). hehehe.
 
Quote from kiwi_trader:

Assuming you trade short and long then a major market "event" has a reasonable chance of making you happy.

911 killed me on swiss francs but I made on euro and gold. Overall good despite having to wait days to close those positions.
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Can i ask how much the swissy gaped past your stop on 9/11 and the broker?

Thanks
 
Quote from hels02:

Jack Hershey... was that the Edmund Fitzgerald? :D

Sorry, interesting way of putting commentary. I had an unbelievable month thanks to Feb 27:). hehehe.
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No not the commercial side of shipping.

More the blue water or multiday sailing where you have to deal with weather during races and going from A to B.

One of the early races for big sailboats in a race that starts Friday night off Westchester County on Long Island sound (Larchmont) and winds up across from Oyster Bay off Cold Spring harbor Sunday afternoon.

The loop takes you around Block Island and often some B boats beat some of the A boats so it gets to be fun.

It is a little tricky to complete as great strategy.

I can remember when Ted Turner got a boat and started racing. He really shook up some of the traditional sailing families. (SORC).

The "prefect storm" was a great commercial story on the other hand.

You can see that I get the "rambling" judgement when I slip into a writing modus that is designed to get people to think.

It would be very intersting to do hour shows weekly on TV that depicted the markets in the way the "perfect storm" unfolded. It would give a break to traders to have a regular fare that was descriptive of what goes on in the markets.

You can see how the 27th had a nice theme and if you look at many of the 80 edges; it was like seeing a Panama City fighter squadron peel off into the Bermuda triangle.

A few nice additional comments were added by jd7419 on some of the edges that tanked that day. The ships were going down in waves like a line squal over taking a reace on a spinnaker run.

today Cramer went through his sector trading screw up that has been running a couple of years so far. This stuff he misjudges may be attention holding for college kids in big groups but doing a real one hour show that features real market action could be a real thriller in the hands of a great crew. Jon on the daily show and Colbert on the report grind out an hours worth of intriguing stuff every day. The RTH's and the over nite offers the same resource and it is as good as the "perfect storm" almost every day. One neat part would be the "set up" for the next program. The moment of zen look forward so to speak.

I get the show every day anyway.....lol....
 
Quote from HolyGrail:

Not if you have a stop market order. Limit orders fail, market orders never fail. You may not get a great fill, but you will be out of the market.
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FWIW, it all depends on where your limit is in relation to the your stop in a stop limit order. If your initial stop 14.05 but you then set you limit at 13.75 the market can drop another $.30 and you can still get filled. I agree on the platform execution speed because the faster it is the quicker your order gets to the market. I always use a broker where once my stops are placed even if my internet goes down or the power goes out my order stays in the market rather than having it taken out when the platform losses connection, I still do however, call my broker to make sure that I get out of my position. Just my $.02 worth.
 
I believe I am correct on this sequence:

A stop loss of $13.75 is placed with your broker....it is held on his server....when, and if, the BID goes to $13.75 your stop loss "limit" order is sent to the exchange as a MARKET order..now you may get filled at any price all the way down, LOL...BUT you will get filled...


As Old Trader said, you will get filled, just may not like the price

Also, keep in mind, this "protection" is aimed at equity owners as other forms of "trading" such as options, derivatives, FX are not considered owners of the shares.....those guys are on their own..

Curbs are placed at certain intervals down, slowly squeezing the action....keeps panic selling out....on 27th curbs were not even on so floor brokers knew instantly that big drop was computer malfunction and not actual trading activity..

SteveD
 
Quote from jack hershey:

No not the commercial side of shipping.

More the blue water or multiday sailing where you have to deal with weather during races and going from A to B.

One of the early races for big sailboats in a race that starts Friday night off Westchester County on Long Island sound (Larchmont) and winds up across from Oyster Bay off Cold Spring harbor Sunday afternoon.

The loop takes you around Block Island and often some B boats beat some of the A boats so it gets to be fun.

It is a little tricky to complete as great strategy.

I can remember when Ted Turner got a boat and started racing. He really shook up some of the traditional sailing families. (SORC).

The "prefect storm" was a great commercial story on the other hand.

You can see that I get the "rambling" judgement when I slip into a writing modus that is designed to get people to think.

It would be very intersting to do hour shows weekly on TV that depicted the markets in the way the "perfect storm" unfolded. It would give a break to traders to have a regular fare that was descriptive of what goes on in the markets.

You can see how the 27th had a nice theme and if you look at many of the 80 edges; it was like seeing a Panama City fighter squadron peel off into the Bermuda triangle.

A few nice additional comments were added by jd7419 on some of the edges that tanked that day. The ships were going down in waves like a line squal over taking a reace on a spinnaker run.

today Cramer went through his sector trading screw up that has been running a couple of years so far. This stuff he misjudges may be attention holding for college kids in big groups but doing a real one hour show that features real market action could be a real thriller in the hands of a great crew. Jon on the daily show and Colbert on the report grind out an hours worth of intriguing stuff every day. The RTH's and the over nite offers the same resource and it is as good as the "perfect storm" almost every day. One neat part would be the "set up" for the next program. The moment of zen look forward so to speak.

I get the show every day anyway.....lol....
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Interesting commentary... I grew up on Long Island, and I know exactly where you are talking about on the Sound. Sailing was never my thing, but that was an interesting way of putting your market perspective:).

I spent a lot of time at Cold Spring Harbor too, love it... for the antique shops and that wonderful italian pastry shop with the handmade cannoli's! :p Nifty little insight there about the sailing:).

Yes, a real commentary would be nice... I can't watch Cramer's BOOOYAAAHHH more than once a year, just to remind myself of why I don't watch it. I have no clue what he says or promotes, once a year doesn't tell me much about his thinking.

Years ago, I would read his market commentary on TheStreet, but he was 50/50, and I can do better than 50/50 without his advice:).
 
Quote from SteveD:

I believe I am correct on this sequence:

A stop loss of $13.75 is placed with your broker....it is held on his server....when, and if, the BID goes to $13.75 your stop loss "limit" order is sent to the exchange as a MARKET order..now you may get filled at any price all the way down, LOL...BUT you will get filled...


As Old Trader said, you will get filled, just may not like the price

Also, keep in mind, this "protection" is aimed at equity owners as other forms of "trading" such as options, derivatives, FX are not considered owners of the shares.....those guys are on their own..

Curbs are placed at certain intervals down, slowly squeezing the action....keeps panic selling out....on 27th curbs were not even on so floor brokers knew instantly that big drop was computer malfunction and not actual trading activity..

SteveD
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Steve, good point, you can have a limit order sitting at let's say $14.95 and the price comes up and hits your limit price but you may not get filled. If you have a stop resting at $13.95 and the price comes down and touches that price your stop WILL get filled. I have never had it just touch my stop and not get filled.LOL
 
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