Mini Apocalypse 2012 flash crash in the ES

Discussion in 'Index Futures' started by KINGOFSHORTS, Dec 20, 2012.

  1. Crossing my fingers that vol is back!
     
    #11     Dec 21, 2012
  2. #12     Dec 21, 2012
  3. The real reason for this drop was a completed Elliot wave structure coming into a Sam Seiden supply/demand zone on a daily chart.

    When this happens...watch out !!:eek:
     
    #13     Dec 21, 2012
  4. #14     Dec 21, 2012
  5. gmst

    gmst

    After this incident, my confidence in world's biggest futures markets has gone down.

    There is no reason next time we have a flash crash (either RTH or in globex session) ES doesn't fall say 300 points.

    This means if your broker auto-liquidates you then any margin below 15000 USD will ensure that you blow up. Doesn't matter if you trade a 10k account or a 500k account. It will just mean a blowup. So, if you are retail and trade mostly 2-3 products (not like CTAs who can have 20 positions simultaneously), most likely it will mean a blowup for you - if you don't have a stop.

    So, to avoid this situation - one key takeaway is to always have a stop - it can be 10 points or 30 points, but always & under every circumstances have a stop. Even if backtesting shows that (lets say) having a 10 point stop degrade performance, then have a 20 point stop, but always have a stop. Better to accept a little bit degraded performance than being left with an account blowup.
     
    #15     Dec 23, 2012
  6. Specterx

    Specterx

    It's impossible for ES to fall 300 points in a single session; it's limited to 5% overnight and 10% from pclose during RTH.

    Theoretically it could be pinned at limit down then go limit down again the next day, but that wouldn't be a 'flash crash.'
     
    #16     Dec 23, 2012
  7. Daring

    Daring

    What spiderman said...

    +1
     
    #17     Dec 23, 2012
  8. During RTH, the price limits are 10%, then 20%, then 30% all on the downside only.

    For extended hours, the limit is 5% both up and down.

    So yeah, a 300 point AH drop in the ES is pure fantasy. I saw that post earlier and chuckled. Sometimes it's good to let people keep their fantasies.
     
    #18     Dec 23, 2012
  9. http://finance.yahoo.com/q/ta?s=^IXIC&t=5y&l=on&z=l&q=l&p=&a=&c=

    Look a little before Jan 2009 on the Nasdaq. This is when the market went down, and never came back up. Now, I am not saying that it happened in one day, but if you did not have a stop, and kept waiting for bounce or averaged down to get a bounce, you would have been wiped out.

    However, if you were Buffet and not on margin, you could in fact buy some stocks and make some money like he did.
     
    #19     Dec 24, 2012
  10. gmst

    gmst

    Thanks for correcting me! Limit down thing had escaped me.
     
    #20     Dec 24, 2012