A trading thought experiment

Discussion in 'Trading' started by axeman, Dec 4, 2003.

  1. Why? They were perfectly legal, not an error, and intentional.

    peace

    axeman



     
    #11     Dec 4, 2003
  2. pspr

    pspr

    I think they have the discretion to bust trades if they deviate a certain amount from the big S&P or the cash. It doesn't matter though, you would be in jail for attempting to manipulate the market anyway.
     
    #12     Dec 4, 2003
  3. Funny.... isnt that what market makers and specialists
    do every day?

    Artificially move the market enough to hit stops and
    shake people out of their position, only to let the
    stock rip in the other direction moments later?? :D


    peace

    axeman



     
    #13     Dec 4, 2003
  4. Yes...but they have a license to steal........

    Michael B.


     
    #14     Dec 4, 2003
  5. Ok...back to the question.

    Since this is a THOUGHT EXPERIMENT, I want to
    avoid the "technicalities" such as broken trades,
    illegal market manipulation, etc, etc...


    In a purely THEORETICAL market place, without
    any of these snags, where everyone is FREE to trade
    and do whatever they want, what would the result be???

    I think that clarifies what im trying to get at.
    Make money, lose money, or about even???

    peace

    axeman
     
    #15     Dec 4, 2003
  6. Any bets on how long it would take to get to 535
    at this rate of 100 emini contracts per second??

    Seconds, minutes, hours, days??? Anyone? :D


    peace

    axeman



     
    #16     Dec 4, 2003
  7. Clearly, you make money.

    To recap, the scenario:

    Unlimited capital.
    You short until the market is halved.
    You buy until infinity (no limit was given)...
    The value of your first buys rises, and you get rich (on paper)... of course, you can never liquidate, else you are going to lose a lot of that value.

    Ok, I know I'm cheating.
     
    #17     Dec 4, 2003
  8. Well...actually there was a limit.
    You only buy back as much as your shorted.

    peace

    axeman


     
    #18     Dec 4, 2003
  9. At that point, you start buying all of it back at the rate
    of 100 contracts per second (same rate).

    ->No stated limit, although it is obvious. Hence, I said I was cheating :)
     
    #19     Dec 4, 2003
  10. Ok...thats clear now. I getcha.

    peace

    axeman



     
    #20     Dec 4, 2003