Market Plunge Baffles Wall Street
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Market Plunge Baffles Wall Street
1–10 of 49 posts
Re: Market Plunge Baffles Wall Street
#2Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
Re: Market Plunge Baffles Wall Street
#3It's really fascinating (horrifying?) that some of these ETFs went to zero for a moment. I can't understand how they cancel all these trades though. Seems like the biggest accounting nightmare ever.
Re: Market Plunge Baffles Wall Street
#4Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
A lot of HF traders pull out in times like this for technological reasons. For example, most quotefeeds (such as Reuters, if my memory serves) have outdated technology that handles load really badly. When quotes are 5+ seconds slow, they're essentially useless, given that HF trading occurs on a millisecond timeframe.
Most liquidity providers would love to be in the market when it's panicking, because this is a great time to make a lot of money, but can't be there if their data is bad and they're at risk of enormous losses.
Re: Market Plunge Baffles Wall Street
#5Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
I still don't understand why anyone would put in a "sell at any price" order. If you sold Accenture at one cent because you put in such an order, well, you bought yourself a lesson to not do that.
Re: Market Plunge Baffles Wall Street
#6Theory:
1) Short DJIA.
2) Pick some stocks and place buy orders at $0.01.
3) Get a friend to fill those orders for you at $0.01, taking the loss. Call it a trader error.
4) A lot of poorly written algorithms, which take into account the last traded price, start selling to cover their stoploss orders (sell if the price 5) Havoc ensues. DJIA is down. Cover your DJIA short and take the rest of the day off.
Re: Market Plunge Baffles Wall Street
#7It's really fascinating (horrifying?) that some of these ETFs went to zero for a moment. I can't understand how they cancel all these trades though. Seems like the biggest accounting nightmare ever.
It actually seems like standard procedure. They reset the market after 9/11, too. Basically, it seems like any time something really unusual happens, it's an excuse to go outside the rules. Back when I was involved in digital gold currencies, this kind of thing seemed pretty standard across the board: banks would just reverse transactions, freeze accounts, etc, any time there was anything unusual, and it seemed like our whole business was unusual, so we were in constant fear that money we'd received and disbursed would suddenly be unreceived after the fact. It was a nightmare, though; you got that part right.
My take away from my experience in that industry was that you can't actually trust banks or other financial institutions to follow the rules; the best thing you can do is to make sure you're lost in the crowd. Don't stand out, and you won't get hammered down. These trades and this whole episode stood out, so of course they're going to retroactively change it to the detriment of anyone for whom it was a good thing.
Re: Market Plunge Baffles Wall Street
#8Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
I still don't understand why anyone would put in a "sell at any price" order. If you sold Accenture at one cent because you put in such an order, well, you bought yourself a lesson to not do that .
Standard trading systems have stoploss orders (sell if price < X), which don't have an option for a lowest price at which to sell.
Re: Market Plunge Baffles Wall Street
#9Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
I still don't understand why anyone would put in a "sell at any price" order. If you sold Accenture at one cent because you put in such an order, well, you bought yourself a lesson to not do that .
Because they are treated differently on the market.
Market orders (sell at any price) are handled first, and then, limit orders are. You can only guarantee one thing: either execution, or a price level. And when you're dealing with stop losses, you want to guarantee the execution in most cases.
Re: Market Plunge Baffles Wall Street
#10It's really fascinating (horrifying?) that some of these ETFs went to zero for a moment. I can't understand how they cancel all these trades though. Seems like the biggest accounting nightmare ever.
On certain exchanges, cancellations happen constantly. It's complex, but it's part of day-to-day operations and after a while it stops feeling unusual.