Fukushimi Nuclear Reactor Tsunami March 2011. All bids for USD/JPY and Crosses pulled. USD/JPY spreads widenning 100-150 pips. GBP/JPY spread widening 300-550 pips. Yes, your "nightmare" can become true especially in currency markets when the central bank clowns don´t act as liquidity of last resort. It seems, you have also missed the SNB debacle. Ever seen EUR/CHF losing 4000 pips within seconds? A colleague I read about lost over $600 Million of his fund´s assets. And some. As far as I understood, he was playing short term ranges in ERU/CHF leveraged to the hilt - making tons of profits due to SNB´s "promise" to defend the EUR/CHF cap at 1.20000. And then the SNB decided to not anymore "defend" it.....
I'm not sure of the details but the exchanges (after the fact) busted all trades a certain % off the original prices before the flash crash. So I guess the people who placed those market or stop orders got a lucky break.
Although I have no personal experience with the complications of a flash crash on a position, the predicament of being long (short) a security and not knowing whether or not the trades will stand sounds pretty nightmarish. I've seen examples of traders entering an offsetting position (assuming the trades would stand), then finding out they were busted and now they have an open position and the market has ripped back the other way. I seem to remember these kind of scenarios occurring a decade or so ago with some frequency.
btw, OP, this is a chart of the Argentinian Merval ETF. This is/was pretty close to a binary wipe out move. Down 40% in one day following a breakout to new highs.
look at that chart anyone playing for the defend, right at the lip of it , deserves not only to lose it all, but an extra 50% of assets under mgmt. can you say moron ?
looks big, but only pulled back to the May low. Its all relative If the S&p dropped 40% , that would be meaningful. A financial cesspool dropping 40% is nothing