No daily trading limits on metals

Discussion in 'Commodity Futures' started by TraDaToR, Dec 14, 2009.

  1. TraDaToR


    Hello metals traders,

    How do you deal psychologically with the fact that there is no daily limits and that anytime you're placing a limit order in the book, you can be caught in an ulimited fat finger...?

    As a non metal example, on oct 5th on IPE UK natural gas which also has no trading limits, there has been a 90K$ per contract spike... Think about the guy that had stop losses and was execcuted on top of the spike... I don't know if the trades have been busted, but it doesn't seems so...

    It can simply be a carrier ender. 1 second and you lose everything plus more to reimburse the clearing firm.

    I trade gold, silver and copper, and don't feel confident right now.

  2. TraDaToR



    I guess Taleb is right when he says rare events are mostly ignored in trader's risk management.
  3. trade smaller and hedge against other stuff using the principles below and you shall have a fighting chance

    remember to trade carefully ... and to know what other BOTS are looking at outside of the sandbox you play in

    good luck

  4. TraDaToR


    The example I chose was a data error, so I 'm quite relieved... Does anyone know if it has ever happen? Let's say a 50K$ per contract spik that never got busted? The 2 year note one in the summer was crazy too, how much was it on a $ per contract basis?

    It's not something you can hedge against or anticipate, anybody placing a non marketable limit order on a no-limit market can face these things. If you're filled on top/bottom of it, you just have to pray the control center will bust it...
  5. If something has a daily limit it can be locked up or down the limit for the day or even several weeks as Coffee was in the 90's.

    Limits are the devil...

    I have always started off with an options play and then converted to outrights when I had a cushion of profit under me so no event has ever crushed me.
  6. TraDaToR


    I am just saying limits are a good way to avoid gigantic fat fingers... However I agree that limits on an ordinary volatile trend day have no real purpose...
  7. About 2 or 3 times a year I used to get errors on my trade screen saying that I was down a gadzillion dollars.

    It is a great time to play a joke on the wife that is for sure :eek:

    You cannot trade based on what would happen given the worst possible scenario (like these other gold traders :D)

    Trade 5 to 10 times smaller positions in the outright and every thing will be gravy.
  8. TraDaToR


    I don't trade big positions, but still... On an entire career, it would be unrealistic not to take those scenarios into account...
  9. How are you trading copper and silver?