STOP orders during Bankruptcy / Crash

Discussion in 'Risk Management' started by CaliforniaKid23, Nov 26, 2007.

  1. has anyone been through a crash or a bankruptcy? if so...did stop orders protect your investments? can a crash or bankruptcy happen overnight, wiping out as much as half of your portfolio?
  2. fuk yeah

    i gotta bail on some c myself
  3. Markets don't always move in an orderly manner. One thing to keep in mind is that a market will usually give "warning" of bad news before confirmation of the news. When you smell smoke, don't wait for the fire.
  4. Stop orders are one way to manage risk. Nothing protects me 100 %.

    One potential source if trouble is fraud. If a company fabricates it's books and police raid company offices then I expect stock price quotes to decrease about 90 % within minutes if trading is not suspended.

    Commodity trading appeals to me because this type of fraud, surprise dividend cuts or mergers are not possible in commodities.

    I think the real risk of trading is the unknowable risk. I can not protect myself from things that I do not know about.
  5. Gustaf


    If its suitable to use options instead of stop orders then they would work. But offcourse they cost premium.

    Protects you against a big crash.
  6. Thats all fine and fair, but NEVER EVER EVER forget some commodities have Limit UP/DOWN days. Pull out your chart book and look at Soybeans in the early 1970's and tell me Jan-Mar 1973 Jul-Sep 1974 (DAILY) how many traders on the wrong end of those moves did not reach for Magnum .45
  7. The limit up/down days can always be exited via options, so you're never truly stuck in them just riding out losers with no way to exit. Just call up the pit and get out

    I prefer Colt anyway...

  8. Gustaf


    About the limit moves, how often does it happen?

    In McMillans book its says its absoultely mandatory to know how to protect your self from this by using future options, then this raises an interesting question, many futures brokers dont seem to offer options on futures.

  9. There are plenty of options for commodities man!!!

    Limit moves happen often in Wheat ( think 10 times in past 6 months)...rare in Soybeans and Corn...

    it's all about riding the dragon, it wouldn't be fun if there was no risk!!! :cool: :mad: :mad: :cool: :mad: :cool: :mad: :D
  10. Gustaf


    Read my question again! :D

    No, I was talking about many brokers not having FUTURE OPTIONS available for trading.

    Iam well aware that there are a vast array of option contracts out there.

    #10     Nov 27, 2007