2010-05-20

There is not much to talk about today's trade. EUR/JPY and GBP/JPY dropped like rock while EUR/USD goes up some. I was able to get 10+ pips from shorting EUR/USD. And stock market (Nasdaq I followed) touched -90 and now pop back 1/3.

What I want to talk today is about the May 6 crash.
this whole thing about may 6 crash investigation , i don't understand, now they are saying it's because some money manager sold large contract on ES, It's really a hudge number of contract.
Here is the LINK and here is the quot:
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It took about 21 minutes for the firm to execute its sell order, Gensler said. "In markets with average volume, it would have taken significantly longer -- perhaps hours." 
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I know ES trading around 1 to 2 m contracts a day, and I heard someone whispering that company was selling a 600K contract? Come on, u don't sell the damn 600K in one market order, u know you are not going to filled and you will crash the market, there are many many many tricks u can play. U can put a 100K buying order 2 points right below the current price and there will be tons of day traders try to front-run your oder. Then u can short as many as you want until u pull your 100K buying order out! There are many brokers make their life on these kind of tricks and their performance is evaluated by this.

Plus, u need about 3B to short this size of the contract and you might be hedging on a 20 to 30 B portfolio.

and now, they are talking about how to prevent market crash....
my point is, everyone enter the market knowing there is a chance of crash, why prevent it.