(I am fleshing out the details.) It is late in the afternoon, maybe 3:00pm EST (1:15 from close). ES has been drifting down. Longs are looking to for a chance to get out; maybe a bounce to break even. Some are looking for a good place to get short, as this looks like a long-term move. Suddenly, a surge of buying sets in. In 2 minutes, ES is up 10 points. Those who were long cover as quickly as they can, "before the spike disappears" and price returns to where it was. Many get short, in anticipation of a rebound. The market does come down back 3 points or so in the next five minutes. No major news has been announced, and now everyone's just kind of waiting to see what happens next. Those who shorted the top of the "spike" aren't ready to take their profits yet, and those who got caught short from the bottom, although sweating, can't bear to take a 7 point loss! They wait. The next surge of buying comes in. 2 minutes--20 points. People who had sell limits just above the high of the previous surge "just in case price comes back up and gives me one more chance" are in (yay!) -- and 20 points down. They are stunned. Those who didn't get out with a 7 point loss, and are now down 27 ($1650/contract) wish they had. Brokers who allow traders to trade on margins of $500/contract "because they have their own risk department" are sweating nails. Some of their traders were already teetering on default after the previous surge. Now they are heavily in default ($5,000 account, short 8, down $12,000) "We should have taken them out when the market came down 3 points..." Emergency phone calls to VPs... "Wait for the market to come down a little; if you take them out now, we'll never see that money." Over the next 5 minutes, the market backtracks 6 points. Most shorts are still holding. Under their breath, they try and talk the market down further. "Come on sellers... keep on coming!" They're down 15-25 points per contracts, and they can't bring themselves to get out yet. "Just a few more points; not break even, but at least something reasonable. It can't stay up here!" The next surge is electrifying. 3 minutes--60 points. IB's automatic liquidation is firing left right and centre, driving the market up even more. The brokers with traders on $500 margins are so far past their risk parameters they are simply frozen; like deer in the headlights. Without automated liquidation, they weren't even able to react to the market's last surge. No one has the guts to go long here, and those who need to liquidate just can't bring themselves to do so.Everyone who was long at the beginning of the move (except those who took an opportune break and had no 'profit targets') has taken their profits--they thought they were smart when they got out with +20 points. Over the past 20 or so minutes, the market is up over 80 points. On the DOME, buy orders number in the 10 and 20 thousands at each of the 5 levels. Who's going to sell into that? Suddenly, the big numbers disappear. It seems as if the market is going to drop like wild. Prices start jumping 5 and 10 points per tick. At one point, price ticks down almost 40 points from its highs. Just as suddenly, the volume returns. Sell orders are devoured, and the buyers whoosh up the market another 120 points from their previous highs. We're now up 200 points. It's about 3:45. Huge volume on the buy side of the dome. 200 points = $10,000/ contract. The most cautious traders (except those who use hard stops) are hurting. Almost all the smaller firms are looking at bankrupcy. People are saying that the buying came from "the far east." The rest of the day is, to the extent one can say so, unevenful. The big fall never happens. Nor does the market surge up anymore. The few traders who fell asleep at their screens and woke up to find themselves up 200 points per contract are sure they're dreaming. By the time they realize they aren't, they start to wonder whether clearing firms are going to be able to clear their trades and pay them their profits. Traders who weren't even in on the move are also nervous. While all the stock traders are jubilant, the futures traders realize this has been a slaughterhouse. They worry their firms will bankrupt. They call their firms to try and withdraw their funds. "The wire department is closed for the day..." they are told, "and the back office has frozen all funds." As I say, I have fleshed in the details somewhat, and I have done a poor job of describing it... I'm not a novelist. But is their any possibility of such a thing ever happening? If so, what can traders, who depend on their trading to earn a living, do to protect themselves?