Catastrophic or "emergency" buy/sell stops

Discussion in 'Index Futures' started by VinnyB, Jan 25, 2009.

  1. VinnyB


    Hi All,

    I know we can only do so much in regard to preparing for the worst: i.e. stops, backup connections, backup brokers, battery backup; but, my question is really for anyone who has been in this same exact sceanrio or at least tried the following.

    I'm a scalper and currently only have one broker. My thought was to open another account with a second broker and every day, put in a one or two contract safety net stop at some arbitrary point above and below the market. Maybe have it auto adjust up/down throughout the day just in case of a meltdown/meltup. More concerned about a meltdown [ie 9/11]. The second account's sole purpose would be there for "big picture protection".

    Are these stops hit on surprise and/or tragedy days?

    Is there a better way?

    Forgive me for what might be a dumb question, but I'm new to trading and would like to do as much as I can to protect my capital.


  2. rickf


    On most days when trading the ES I have a 5-point emergency stop automatically applied on all orders upon entering a position. That's in case of network or computer problems.....mentally I will give myself 2 or 3 points for a trade to 'work' but if it doesn't happen, I'll manually close it at -3 points.....gods forbid I lose my bandwidth or PC crashes, at least I know my losses will be capped at -5.

    Of course, any stop -- stop loss or catastrophic stops -- can be hit during periods of stop running or chop, so beware of market conditions and adjust your trade planning accordingly.
  3. My belief is that whenever you go long using leveraged futures, you're always at a large risk. Say for instance you go long 10 ES Emini contracts, you're controlling half a million dollars. If another terrorist attack or something comparable happens, the markets could close all of a sudden with you stuck in the position. Then when the markets reopen with a 200 point drop, you've lost $100,000. I don't see a situation happening like that in reverse where you're short the market.
  4. VinnyB


    Thanks for the responses.

    I guess that was my question, Sam. More along the lines of an attack, assassination, etc. Markets close and then reopen...stops don't matter, I guess. I want to try and mitigate damages if possible. Maybe using options somehow every trading day. I thought maybe I could do it for "free" with stop orders in the other direction.