Friday, April 01, 2011

This blog post is related to yesterdays ETF plunge caused by a market marker. It brings to light one of my trading rules concerning stocks that plunge sharply (or spike) to obviously dangerous levels. I simply do not try and buy (or short) these spikes anymore because the trades are broken nearly 100% of the time and often with a loss when only one side of the trade is broken. When they are not broken, it means real news and you are catching a falling dagger.

These short sighted rules on error trades saves mostly large institutions money from being careless while discouraging traders from bringing the market back to equilibrium quickly. When I make a mistake I have to pay for it and I wish it applied to everyone.



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