Matt, broker cannot "make a forward-looking prediction whether it will retrace". This is quite a dangerous idea. If account lost money, it could easily lose more.
Read what I said again. I said "it's very hard to look at the individual account, analyze the risk, and then make a forward-looking prediction whether it will retrace" In other words, it's impossible.
Pump and Dump happens. It is a standard tactic. Your job is to not be on the wrong side. Know that it happens with certain stocks and other instruments. If it helps, I have been on the wrong side several times and the right side more times, so net I think I am probably ahead. I actually has a strategy for it that was abandoned for various reasons.
After seeing mskl's post, I looked at a chart for KELYB. Seems the same sort of think happened August 11, price went from 18-78. so, unless you do absolutely no digging before you buy into a position, you would have had adequate warning that it COULD happen, because it HAD happened, less than 2 weeks ago. Stops, man, stops. Don't leave home without them.
I highly doubt that stops would have saved him... IBKR has "protective" algorithms that will reprice limit orders to "reasonable" levels. Even market order are capped. In such a stock this means you wont be able to get out aftee a volatility halt as they limit your buy order below current market price and only lift it higher aftee some time... You are at risk of missing the exit completely if it just runs from volatility halt to volatility halt.
Sorry to know your loss. But this spike doesn't look like a price error? It lasted 1+ hour. Curious what happened exactly. This looks like the negative crude future back to March. Something must be wrong.
Low predictability, low frequency , marginal edge. AND not scalable enough. Not a bread and butter for me, and that is what I was searching for.