There were a number of stocks that went to 0.01 today not just P&G, so the fat finger theory going around the msn is bogus. Seems like the black boxes took a number of things to 0 after the momentum started kicking in. FAX on the AMEX went to 0.01 at 2:47 RDN on the NYSE went to 0.01 at 2:46 at 2:46 the DOW had a rsi of 2.69 on the 1 min chart.
Yes ACN, couldn't remember which one it was. I have never seen a stock with multiple bars on top of one another like that on a 1 min chart.
A question for you guys that trade on margin. What happens if you were long the minute before ACN went to a penny? Does a single tick at a price trigger a margin call liquidation? Let's say you had $39000 cash in your account and you bought 1000 @ 40. Then it ticks to 0.01 and bounces right back. Is there a person that clicks a button to auth the liquidation, or does their computer just automatically dump it once you cross your margin threshold?
I don't think that would happen. Usually the margin call process is: they recalculate the equity value once a day only: overnight. If you buy some stocks on margin and the equity falls below their maintenance threshold, that will trigger a margin call. Your broker will call you, e-mail you or something. You have something like up to 3 days to send in more money to meet the margin call. (Or you can sell the stocks yourself to reduce the debt.) Only if you don't meet the margin call within the deadline will the broker liquidate your positions. If your stock goes to zero (e.g. delisted or something)... it could happen. You will end up owing money to your brokerage firm and they will legally try to collect it from you. But I don't think there will be a computer program to automatically sell out your position without giving you a margin call.
PID, PEY, VYM...these are ETF's that traded for pennies today! Other ETF's that traded 20-70% off were DVY, VIG, DEM. I suspect there were many others. This should not happen with ETF's which are touted for 'liquidity'! This is bullshit. This "market is made up with false prices and when there's a software fuckup you can't even trade. God forbid if there was a *real* panick. What the hell then? I say get rid of the fucking black boxes. Charge a minimum 'tax' to get these scumbags OUT of the system!
risktaker, What's even worse is for example TYP - it is a 3x BEAR fund for tech and it went from the $8-$9 range to have a day low of .15! There is something wrong there as there clearly wouldn't be panic selling of a bear fund on a day like this. JJacksET4
Depends on the broker. If you are at IB then you would get auto-liquidated at the market and have a 0.01 fill. You are then relying on the exchange to bust the trade in order to avoid blowing out your account. I.e. IB's auto liquidation actually increases risk massively in a crash.
very true and accurate statement. one example of how this automated system works..i've been in situation,where i bought a s*t load of ..let's just say securities..and their system is about to start liquidating my positions on whatever algos they have in mind. i was on phone with IB's trading desk, saying that they should put on hold this liquidation, because trades will be busted anyway within minutes. i was right about that. BUT! the scariest thing that they have no power over this automated liquidation system. at least that what they said to me. the trading desk cannot stop liquidation process. lucky to me in example above, that by the time of liquidation markets are closed already and shortly after IB got call from exchange and all those positions been removed from my account. but that was scary experience . i warn them about something similar very long time ago,but nothing was changed.