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One reason for sharp dip is people trying to make a profit by selling when its going down and then buying when it has reached bottom or going up. So i guess qu
by z3t4 6y ago
One reason for sharp dip is people trying to make a profit by selling when its going down and then buying when it has reached bottom or going up. So i guess quantum is bad at predicting human factor, which is the biggest factor, and to be fair - mostly random.
- dualthro 6y agoI believe the sharp dip was a "short ladder" as they call it -- hedge funds selling the stock to eachother at low prices to attempt to lower the stock price and trigger some retail investors' stop orders to trigger and free up some shares for cheap. https://twitter.com/justinkan/status/1354861574163320833/photo/1 https://twitter.com/justinkan/status/1354861574163320833/pho...
- hntrader 6y agoThis is a conspiracy theory spread on social media. Shorting after it has dropped so much already is an unprofitable strategy. These are cascading liquidations and the valid strategy is to go long when the liquidations stop and you get a relief bounce that squeezes out the novice shorts who chased the move. People have different names for the strategy (wall drop long, parabolic long). Shorts are mostly covering (not initiating) during the drop. The only sophisticated traders adding to a short would be options dealers who need to gamma hedge, or delta one HFTs trying to capture a quick move based on short term order flow imbalance.
- Armisael16 6y agoI think you may need to reread the tweet. He isn’t saying they shorted during the drop; he’s saying they shorted just before they initiated the drop. It’s obviously profitable to short a stock when you know the value is going to tank in half an hour.
- hntrader 6y agoThe tweet is fine and I'm sure many hedge funds and prop firms shorted the initial catalyst. What I'm referring to is the "short ladder" hypothesis mentioned in the parent post which was originally spread on WSB that Justin didn't refer to in the tweet.