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>Any trader should know that the market can move suddenly and powerfully,
>who cares why. People should expect the unexpected, and protect themselves
>accordingly. If the shorts had some kind of protective stops on the books
>they could have survived.
>
That is the real concern with the Greenspan announcement. For daytraders,
there really was no way to protect themselves. I have no idea how much
paper got filled on the way up after the announcement, but there is a pretty
good chance that regardless of where a stop was placed, that it would have
been filled at the high of the spike. That is a scary thought. This sort
of move happens very infrequently, but is a good example of where stops can
do very little in controlling risk. In fact, in this case, it would have
been better to not have a stop, and wait for the mkt to stabilize a little-
not an easy thing to do under pressure, but something to keep in the back of
your mind if something like this ever happens again.
Chris Lober
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