Floyd Upperman's Blog

May 6, 2010

Equities

Filed under: Uncategorized — floydupperman @ 7:31 pm

Simultaneous electronic orders to SELL sent equities spiraling sharply lower in the last hour!  How and why?   Today traders, large and small, individual and institutional, exist on every corner of the planet and each trader holds the power to send immediate orders to buy or sell!  And many are trading leveraged instruments as well!  Traders can send orders to the electronic exchanges at the speed of a click of the mouse!  When the masses panic, the orders to sell can quickly overwhelm the system and in a market without an “up-tick rule”,  sell orders can continue to be executed as prices drop and drop, even without the slightest bounce.  It takes buyers to come in and finally provide a floor for the price. Otherwise, the sellers will send prices sharply lower very fast!   I suspect that’s a larger part of what happened in here today.  

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