Reply to Question for the Old Timers on Stop Losses

Forum Index » Money and Finances

Reply to "Question for the Old Timers on Stop Losses"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I would not use a stop loss to  protect my investments.  We had a flash crash a few years ago that triggered many stop losses on individual stocks, not sure about the ETFs, and those positions recovered their losses within minutes.  I would  just be diversified to manage my risk in investments.

A similar event could happen again.  And the powers that be never fully explained the reasons for that event. [/quote]

Who are the powers that be and what explanation might they give for the flash crash?
[/quote]

The 2010 flash crash, which saw the Dow Jones Industrial Average lose almost 9% of its value in minutes, was a complex event triggered by a combination of factors, including a large sell order, high-frequency trading, and market structure issues. A mutual fund's automated sale of $4.1 billion in E-mini S&P 500 futures contracts initiated the initial price drop. High-frequency traders, who trade at extremely high speeds, exacerbated the decline by rapidly buying and selling contracts, creating a "hot potato" effect.[/quote]

Great. So a free market powered by technology did what it was capable of doing.

Because from the previous post by the pp, we were led to believe that there is some secret group of powerful people pulling the market strings behind the curtain.[/quote]

No matter what the cause is, if a market as liquid as the DJIA/S&P can drop 10% in minutes (and then rebound), it's not a great argument for stop losses.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics