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Re: Money Management Stops



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In a message dated 4/11/00 9:12:37 PM Pacific Daylight Time, grt@xxxxxxxxxxxx 
writes:

<< While not familiar with your quotation, I thank you for it.  >>

Guy,

Its not my quote but a quote from someone who wiped out a $100 million dollar 
fund and then went more than $20 million unsecured.  The whole industry knew 
he was going to go bust sooner or later.  He surprised everyone and managed 
to trade without stops for quite a while.

I think that worrying about floor brokers running stops is mostly just trader 
paranoia.  In most cases they would have to spend too much money to do it.  
Why would someone trade 500 contracts to pick off a five lot stop order?  
Doesn't make sense.  Now if they could trade five lots to pick off a 500 
contract stop order that would make sense.  In my opinion the fact that stops 
sometimes get raided is not a sufficient reason not to use them.  I think 
they are very necessary and if they are set properly they save money in the 
long run and perhaps prevent a catastrophe like that suffered by Neiderhoffer.

Chuck