Some traders say one culprit for the quick downdraft might have been a type of trade called an "intermarket sweep order," or ISO. ISOs, which some studies say account for nearly half of all trades, send trades to whatever exchange that has the best price. The order can remain there until it is filledâeven if that means the price falls to near zero. A large number of stocks that plunged dramatically Thursday were ISO orders in which there were no apparent buyers, data shows. Shares of consulting firm Accenture PLC fell from $41 at 2:30 p.m. to $32.62 at 2:47:46 when a trade was routed through NYSE Arca Exchange. Seconds later, at 2:47:50 p.m. an ISO trade cleared through Nasdaq at $5.54. Moments later, an ISO trade went through on Nasdaq at $3.04. The shares traded at a penny at 2:47:53 p.m.... http://online.wsj.com/article/SB100...7716.html?mod=WSJ_hpp_LEFTWhatsNewsCollection What a joke. And you are calling the US electronic markets "sophisticated" ???? That's Third World quality.
The trading markets are as sophisticated as we have been able to make them. The system safeguards, cutouts, circuit breakers, and shutdowns could still use a bit of polish. If trades execute by computer, and circuit breakers require human intervention, the safety switch operates in geologic time, literal aeons, compared to the trading. Third world? Ok...that works for me.
The moral of the story, put in a GTC order with big-size to buy your favorite blue-chip stocks at 2-cents, limit-or-better. One of these days, you may get filled!
From the NYSE glossary Since it's a limit order, I don't see how it could just sit on the book until it is filled regardless of price. After reading another article in the WSJ, it appears that the possible culprit was not ISOs themselves, but algos sending many ISOs at successively lower prices that were determined by finding the lowest best bid at the top of the books at the various market centers. The reasoning appears to have been that if you want to dump some shares of PG fast, find what the current lowest best bid for PG is, and then send an ISO limit sell order at that bid price so that you can quickly get those sell orders executed at all of the market centers (which should have bids greater than or equal to your limit price). This could have accelerated the downturn by making algos continually lower their sell limit prices when there was a lower bid at the top of one of the books.