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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.
Isn't the only sure protection deep out-of-the-money options? Pretty cheap
insurance against shock moves.
Bob Fulks
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