Page 332 - THE MARKET WHISPERER

328 PART 10 - Winning Trades
Note What Happens to the SPY Within Several Minutes:

On May 6, 2010, for reasons that remain unclear, a large fund accidently
sold a huge amount of S&P 500 futures in one sad click of the button. In
recent years, in light of increasing usage of algo trading platforms, such

events occur with increasing frequency, so much so that the name “fat

finger”was invented for the phenomenon. In this case, the fat finger sold
S&P 500 futures and crashed the futures index (ES) by 10% within seconds.

It was a shocking event, known as the “Flash Crash,” which kept traders
worldwide glued to their screens, thinking for a moment that the end of

the world had come! And indeed, the end of the world had come for some
of the larger futures traders who use 20:1 margin. In actuality, by what
would become understood as the halfway point of the drop, when the
ES fell “only” by 5%, their entire accounts were wiped out, since 5% at
20:1 = 100% ! When their accounts reached a zero balance, their brokers
automatically closed the accounts, and when the market pulled back just

several minutes after the fat finger had made its move, those traders were

left in complete shock, with accounts showing a perfectly round zero. That

was the last day many futures traders I know ever traded, and I’m sure the

same is true for thousands more whom I do not know.

SMART Leveraged scalps are guarantors of failure: if not today, or
MONEY even next year, their day of judgment is bound to come.