Flash Crash Trading

Discussion in 'Trading' started by Buzzed, Nov 11, 2010.

  1. Buzzed


    What about a secondary system where you allocate a small amount of your trading capital into daily equity long trades that you set at ridiculously low prices for the sole purpose of capturing the extremely rare event of a mini flash crash? Like a stub quote, but with alot of volume.

    On a similar note. Does anyone try trading just inside the curcuit breakers where you predict where a 10% flash crash at noon would take the equity to and set the price just above that level?
  2. Bob111


    well...first -your broker not going to like this..most likely-they will kick you out..assuming you are talking about stocks-do you realize how many orders needs to be placed and handled properly by broker? and stocks DO move a lot..so-placing a buy 50 % below market and forget about it for month will not work. there is will be so other issues which will make this idea pretty much worthless. plus-do you know,when next crash(if any) will occur?... are you sure that even if you going to get some fills that they not going to be busted?

    few years ago i remember the case,where exchanges are busting the trades WEEKS after the fill. while they own rules are saying-30 min max to report, decision-EOD max.
    bottom line-you kinda late for this one :p
  3. Buzzed


    Hey thanks for the feedback. I predicted that the SEC would intervene to make it not work even if I did pull it off. I guess I just needed a 2nd opinion to confirm it.
  4. Bob111


    not SEC,but exchange(based on SEC rule-remember?-10% within certain time-trading halted). it is very unlikely to receive any fill away from market or during sudden drop,then there is a possibility that this fill will be reversed later by exchange and on top of that-those 10% SEC circuits..chances to get into something profitable-close to zero + lot of work to maintain and create software,that would maintain or adjust the prices. chances to get into shitty trade when drop is occurred due news,halt or whatever-100%..the choice is yours :p
    use to be a fun game,not anymore
  5. the whole concept of a stop loss is now nearly obsolete.

    as much chance (or more) of you being ROBBED of shares in a fake down move as selling in a timely manner before a bigger drop
  6. Good plan, would work most of the time. You'd make a bit here, a bit there, but what happens when the blip isn't a 'flash crash' and say, God forbid, Al Qaeda sent a nuclear bomb to the west coast?

    Well, you would be filled long at 5 or 10% lower than the market price when the event came out, but there would be a difference. The market would stay limit down, with only the ability to buy, the problem being of course that no one would want to buy.

    They would close it down and when it re-opened the auction would be 25-30% lower.

    In summary, you'd do your whole account:confused: