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It's all very well to say that the market "self corrected" unless you lost a bundle w/ stop-loss orders that were triggered on the down-spike.

by jbarham 16y ago

yummyfajitas 16y ago
Very true. If you made the problem worse by placing "sell at any price" orders, you lost money. On the other hand, if you (as many HFT's did) tried to buy at the bottom and push the price back up to normal, you made money. This is why the market tends to correct errors quickly. Fixing things == making money, breaking things == losing money.
- borism 16y ago
  Nobody said people placed simple STOP orders. I think it's pretty obvious to even n00biest of the traders and investors that in such volatile markets as we had in last couple of years you should use STOP LIMIT. So all those people that wanted to protect their hard earned investments (incl. 401k's) at a reasonable level "broke" things and HFT "corrected" them!? In my world that's actually called stealing.
  - yummyfajitas 16y ago
    From the comment I responded to: "...unless you lost a bundle w/ stop-loss orders..." If you placed stop limit orders, you didn't lose a bundle and you also didn't harm the market very much. If you placed a stop limit on Accenture at 40, you lost $1/share. That's a hit, but not a ridiculous one. That's the penalty for telling the market that Accenture should be priced at $40 when it should really be priced at $41. A lot of retail investors actually did place stop loss orders. That's why Accenture traded at $0.01 (note: those trades were broken). Bargain seeking HFT's and daytraders bought at $0.01, sold at $0.05, and quickly pushed the price of Accenture back up to $40.0 or so. The market will hurt you if you give it bad information. The worse the information, the more you lose. If you don't understand this you should not trade.
    - borism 16y ago
      Stop bullshitting. We are not slaves of the Market, we shouldn't give it any information, it should give us information. That's the utility of the market you know. When the game becomes "who has the fastest program to rip off this stupid risk-averse 401k guy trying to make few basis points above CD" Mr. Market totally defied it's purpose. That's when we should call the butcher and rip some tentacles off.
      - yummyfajitas 16y ago
        "Risk averse" and "trying to make a few basis points above CD" are mutually contradictory statements.
        borism 16y ago
        Now I'm confused. How is expecting return on risky investment being very close to return on risk-less investment is not risk-averse?
      - lotharbot 16y ago
        > We are not slaves of the Market, we shouldn't give it any information, it should give us information. When we're buying or selling, we have to give the market information as to our buy or sell price. We have to give information to the market in order to participate in it. The information coming out of the market, after all, is merely the aggregation of the information we put into it. If the information you give to the market is "sell at any price" when what you actually meant was "sell at $40 or more", you messed up. Don't blame the market when you give it the wrong information and it takes advantage of your mistake; if you offer a ridiculous bargain, the job of the market is to allow others a chance to jump at that bargain, which is exactly what they did.
        borism 16y ago
        Again, you're thinking of retail investors being like herd of stupid sheep. First of all, very elitist from you (even though I suppose you're one of them too). And second, actually not true. As I said, no (or almost no if you like) retail investor is stupid. All they wanted to do is to protect their positions at a reasonable level depending on variety of factors like entry price, relation of the price to some moving average etc. etc. So calling that stupid and being equal to "offering a bargain" or giving Mr. Market "wrong information" is itself stupid at best.
- jbarham 16y ago
  How can you blame the retail investor for having stop-loss orders to lock in profits and praise some HFT's for "fixing" the flash crash by buying at the bottom when it was other HFT's that precipitated the flash crash to begin with?! Maybe that's why the retail investor is getting out of the stock market and leaving it to the machines to fight amongst themselves.
  - yummyfajitas 16y ago
    Read the SEC report. The flash crash was precipitated by a fat fingered mutual fund. It was exacerbated, among other things, by the stop loss orders this price decrease triggered. ...stop-loss orders to lock in profits... Go learn what a stop loss order is. I blame the retail investor for placing an order he doesn't understand.

It's all very well to say that the market "self corrected" unless you lost a bundle w/ stop-loss orders that were triggered on the down-spike.

by jbarham 16y ago

It's all very well to say that the market "self corrected" unless you lost a bundle w/ stop-loss orders that were triggered on the down-spike.

yummyfajitas 16y ago

Very true. If you made the problem worse by placing "sell at any price" orders, you lost money. On the other hand, if you (as many HFT's did) tried to buy at the bottom and push the price back up to normal, you made money. This is why the market tends to correct errors quickly. Fixing things == making money, breaking things == losing money.

borism 16y ago
Nobody said people placed simple STOP orders. I think it's pretty obvious to even n00biest of the traders and investors that in such volatile markets as we had in last couple of years you should use STOP LIMIT. So all those people that wanted to protect their hard earned investments (incl. 401k's) at a reasonable level "broke" things and HFT "corrected" them!? In my world that's actually called stealing.
- yummyfajitas 16y ago
  From the comment I responded to: "...unless you lost a bundle w/ stop-loss orders..." If you placed stop limit orders, you didn't lose a bundle and you also didn't harm the market very much. If you placed a stop limit on Accenture at 40, you lost $1/share. That's a hit, but not a ridiculous one. That's the penalty for telling the market that Accenture should be priced at $40 when it should really be priced at $41. A lot of retail investors actually did place stop loss orders. That's why Accenture traded at $0.01 (note: those trades were broken). Bargain seeking HFT's and daytraders bought at $0.01, sold at $0.05, and quickly pushed the price of Accenture back up to $40.0 or so. The market will hurt you if you give it bad information. The worse the information, the more you lose. If you don't understand this you should not trade.
  - borism 16y ago
    Stop bullshitting. We are not slaves of the Market, we shouldn't give it any information, it should give us information. That's the utility of the market you know. When the game becomes "who has the fastest program to rip off this stupid risk-averse 401k guy trying to make few basis points above CD" Mr. Market totally defied it's purpose. That's when we should call the butcher and rip some tentacles off.
    - yummyfajitas 16y ago
      "Risk averse" and "trying to make a few basis points above CD" are mutually contradictory statements.
      - borism 16y ago
        Now I'm confused. How is expecting return on risky investment being very close to return on risk-less investment is not risk-averse?
    - lotharbot 16y ago
      > We are not slaves of the Market, we shouldn't give it any information, it should give us information. When we're buying or selling, we have to give the market information as to our buy or sell price. We have to give information to the market in order to participate in it. The information coming out of the market, after all, is merely the aggregation of the information we put into it. If the information you give to the market is "sell at any price" when what you actually meant was "sell at $40 or more", you messed up. Don't blame the market when you give it the wrong information and it takes advantage of your mistake; if you offer a ridiculous bargain, the job of the market is to allow others a chance to jump at that bargain, which is exactly what they did.
      - borism 16y ago
        Again, you're thinking of retail investors being like herd of stupid sheep. First of all, very elitist from you (even though I suppose you're one of them too). And second, actually not true. As I said, no (or almost no if you like) retail investor is stupid. All they wanted to do is to protect their positions at a reasonable level depending on variety of factors like entry price, relation of the price to some moving average etc. etc. So calling that stupid and being equal to "offering a bargain" or giving Mr. Market "wrong information" is itself stupid at best.
jbarham 16y ago
How can you blame the retail investor for having stop-loss orders to lock in profits and praise some HFT's for "fixing" the flash crash by buying at the bottom when it was other HFT's that precipitated the flash crash to begin with?! Maybe that's why the retail investor is getting out of the stock market and leaving it to the machines to fight amongst themselves.
- yummyfajitas 16y ago
  Read the SEC report. The flash crash was precipitated by a fat fingered mutual fund. It was exacerbated, among other things, by the stop loss orders this price decrease triggered. ...stop-loss orders to lock in profits... Go learn what a stop loss order is. I blame the retail investor for placing an order he doesn't understand.