Ishares ETFs look Flash Crashy

FUEGO said:
From the news article shared by ESRwannabe, I see many ishares ETFs listed as having trading halts. Hopefully that won't be grounds for reversal for folks like me. I wasn't gutsy enough to arb out of one ETF into a similar ishares ETF in case they reversed one half of the trade later.
Click to expand...
I clearly recall this happening during the flash crash, with some traders stuck with a net loss when part of the trade was reversed the next day.
 
I put in a limit order yesterday for an ETF, but I don't think it crashed quite far enough for it to execute. I haven't logged on to check the actual order, but from yahoo.com/r/sq, I see it dropped about 6.5% and my order needed about 7% :facepalm:
 
MichaelB said:
Exactly, and more so with VIG, which has much more liquidity, average daily volume is >600K. I thought the algorithms and market makers continuously bought and sold to arbitrage the differences between the ETFs and the underlying baskets of stock. I must have wasted 10 minutes this morning thinking it was a mistake before buying. :facepalm:
Click to expand...

It took me about 10 minutes to realize it was a huge buying opportunity. Even the asks were way under the underlying value of the securities.
 
MichaelB said:
I clearly recall this happening during the flash crash, with some traders stuck with a net loss when part of the trade was reversed the next day.
Click to expand...

Ouch.

I think I'm stuck holding IJS and IUSV for 29 more days due to FINRA regs governing me (due to DW's job), but I could sell similar but not the same to offset. Maybe I'll wait to see if there's a reversal tomorrow.

The good news is my trade confirmations both look 100% perfect, with correct number of shares (and not -1).
 
Last edited:
I logged onto my Fidelity account this morning in semi amazement as I watched the Futures quotes. I checked on SDY (which I own a bunch of) for some unknown (and very lucky) reason and saw it was down 25%. At the open I placed my order. Looks like it went through. 31% gain. Still down overall today but that one felt GOOD.
 
I'm jealous. I tried to get IJK for $130 but my first order seemed to get lost at Fidelity and my second try never executed. Bid/Ask was all over the place, sometimes looking reasonable and sometimes crazy, with $122 bid. My one serious buy order didn't quite make my price, so I may end up doing nothing today.
 
I couldn't access my Wells Fargo brokerage account during the tumultuous period this morning. I was ready to jump all over some price anomalies, but the trade screen wouldn't open. This is went on for at least 10 minutes. By the time I got in,things had stabilized.
 
I looked at my accounts early... was trying to figure out why some were 16% to 32% down.... DVY, SDY,PWV, PKW, SCHG My only guess is lots more sellers than buyers, the sellers were either market or stop loss orders and the buyers were limit orders with low limits.
I thought about it later... should have....
 
Darn! I was out of town and did not have Internet access until the market has closed. So, I missed out on all the fun. But then, I might not be able to breakthrough the logjam at the brokerage houses to make any trade. That would just cause an aggravation. (If that sounds like sour grape, it is :) ).
 
NW you have a lot of cash on hand...I would be writing cash secured puts left and right on these 1000 point drop days...you could buy a third house with the proceeds.
 
It's not so simple. Some of that cash sits in a 401k account, where I cannot make such trade. And I have intentionally put some other cash out of reach, where it becomes "funding of last resort" (I would be living in a class C at that point :) ).

So, my trading power is only a couple of 100K's. And as a market timer, I have been thinking that if I could jump into the market [-]at[/-] near the bottom using leveraged ETFs, I could make a decent gain AND also limit how much I would lose if SHTF.
 
You won't lose anything. The next flash crash, when SPY drops to $180 or something, write a few hundred $170 puts. If they get assigned to you, just buy the stuff and ride it out, this will be a V shaped recovery or the USA goes under. If they don't get assigned, pocket the $60,000 and go back to fishing or whatever you do during the day.
 
For 100 contracts of SPY at $170, I would need $1.7M in cash, which I do not have.
 
That is what a margin account is for :D:D:D
 
Had a $88 limit order set for VOT VG medical etf. Triggered early this morning when the initial big drop accrued. When last I looked it was up about 10%. Similar with GIS. Limit order triggered early last I checked it was up about 5%.
 
Henry Lili said:
Had a $88 limit order set for VOT VG medical etf. Triggered early this morning when the initial big drop accrued. When last I looked it was up about 10%. Similar with GIS. Limit order triggered early last I checked it was up about 5%.
Click to expand...

Mid cap. Not medical. Spell check thging

Sent from my LGL34C using Early Retirement Forum mobile app
 
I saw similar numbers for RPG, Guggenheim growth ETF, showing down 30%, recovered! but someone lost and made a lot of money for a brief period. I would have thought the arbitrage computers would never have allowed for such a gap to the individual securities that make up the ETF.


Sent from my iPad using Early Retirement Forum
 
It looks like those superduper computers that do high-frequency trading in microseconds are not infallible after all. And some human traders, some on this board here, manage to beat them and make some money.
 
Last edited:
Sounds like I missed out on a great opportunity there. Congrats for the ones who did seize the moment!

My cash reserves are not available for flash buying (or selling), as a buffer against emotional decision making .. didn't realize that would exclude me from things like this.
 
audreyh1 said:
Price discovery was not happening.
Click to expand...

Oh, it was happening on some of our computer screens. :D

Looks like my trades stuck. First (and probably last) time I make 25+% in one day. Almost 2 months worth of spending. Now to erase the 4 years worth of spending we lost in the last week or two...

Unfortunately (for me) it looks like the market will recover significantly at the open. I was really looking forward to some tax loss harvesting and shifting some $$ around but I might lose some or all of that opportunity today.
 
This is why I have zero problems with HFT and algo trading.

In general, they improve bid/ask spreads, increase volumes (hence reducing or eliminating market impact costs for us small-ish traders), and provide a basic level of liquidity for some thinly traded issues.

And every 5 years, they really really F up bad. :)

I'm really tempted to put sell orders in for all of my ETFs at 20-30% above yesterday's close just in case something similar happens today. I'd hate the six figure cap gains but somehow I think I could manage it. :) And there's no wash sale rule on the sell-buy trade (nor am I limited by spousal FINRA regs).
 
Last edited:
FUEGO said:
Oh, it was happening on some of our computer screens. :D

Looks like my trades stuck. First (and probably last) time I make 25+% in one day. Almost 2 months worth of spending. Now to erase the 4 years worth of spending we lost in the last week or two...

Unfortunately (for me) it looks like the market will recover significantly at the open. I was really looking forward to some tax loss harvesting and shifting some $$ around but I might lose some or all of that opportunity today.
Click to expand...
My trade is there as well. :)

I bought a few other things yesterday. I intended to buy a bit more, but had to leave unexpectedly and by the time I got back the market was closed.
 
MichaelB said:
My trade is there as well. :)

I bought a few other things yesterday. I intended to buy a bit more, but had to leave unexpectedly and by the time I got back the market was closed.
Click to expand...

Yep, got a few hundred $k worth of sell orders placed way out of the money. Fingers crossed for another screwy opening.

I really got lucky yesterday. I can't remember the last time I was sitting at my computer staring at tickers exactly at 9:30 am. But DW was working from home so I joined her in the office and just happened to log on to see what the markets were up to. Just a few days ago I accidentally stuck IUSV into my YAhoo portfolio tracker, and that's what tipped me off to something crazy going on (everything's down 3-4%, IUSV down 30%+).

Cascading dominoes of luck.
 
From an ultra conservative...

Can't get shot for having an opinion, so here's my thinking on the stock market today. Sometimes it's a good thing to see what the minority is thinking. :cool:
So: HFT, ETFs, Algorithms... and the Black Box

A Millisecond = One one thousandth of a second.

As well as being the cause of market instability, possibly the single most efficient tool for changing the balance of wealth in the US.

We are led to expect that the stock market is a type of auction, where individuals bid for shares of stock.

Imagine an auction, where the auctioneer controls the sale... the "going, going, gone!" that happens when his head is turned and doesn't see your hand raised to place a higher bid. Then imagine that this "sold" takes place in a millisecond.

Now imagine that instead of people... the transaction is made with competing computers... programmed to buy/sell at a rate of one thousand transactions in a single second.

Now, imagine what can happen in that single second, when bids (trades) are made by computers, designed to work in concert... buying and selling... taking profits in the matter of seconds... and the money leaving the market... not to the person waiting patiently at the computer to see if his bid is confirmed, but to the people who are manipulating the values.

Not readily apparent in the news, but trillions of dollars disappear from the markets, in the matter of hours or days.

"Ah, yes, but the market recovers!"

Well, yes... but where did the money go in the first place? And, more importantly... Where did the money come from to replace the money that disappeared?

So, the next question is... "How do you get in on the first part?"...

Hmm... maybe you're a trader. Maybe you get lucky. Maybe you can beat the "black box".

Or maybe you wait it out. The "market" always comes back. The next question is, "How long does it take for it to come back?"

In 1929, it took until 1936. (some say until 1945)
In 1974, it took 8 yeas to recover.
The average is 2 years.

Buy low, sell high... of course. But who really does that? The greatest profits come from the "buy low" risk takers... What usually happens, though, is that the "sell" come somewhere nearer the bottom, and the "buy" somewhere nearer the top.

Stay the course? Wait? Play the 2 year odds? In a stable world, okay... but where will the price of oil be in two years? When will the "Tech" bubble level off? And if you hang in there for two years, you'll be back where you started.

Where is the SEC and the CFTC in all of this? Historically, when regulation has taken place... how long did it take, and who represented the investing public during the decision making process? After the "Flash Crashes" what changes were made to safeguard future problems?

This may be worth a read:
Black Box Trading: Computers Taking Over Wall Street? - Business Insider
 
You must log in or register to reply here.

Similar threads

S
Problems with Fidelity Bond depth of book
Replies
3
Views
497
foxfirev5
foxfirev5
Brook2
Can't sort data on Fidelity Website for CDs I bought.
Replies
10
Views
942
Northforker
N
U
Is SPLG a good enough ETF for S&P500?
2
Replies
32
Views
4K
NW-Bound
NW-Bound
R
Fixed Income is hard..... do not know which way to go
6 7 8
Replies
180
Views
16K
tulak
T
D
Retired in 2017@42
Replies
10
Views
915
Koolau
Koolau

Latest posts

Back
Top Bottom