Wednesday, February 28, 2007

Relive the crash with me

I have been day trading for five years, and I've never seen anything like yesterday. The market was down more than 500 points at one time yesterday. It was crazy. The chart here is a one minute chart of the Dow Jones Industrial Average. The elipse was the major intraday crash, that happened right around 3PM. That one large red bar, corresponding to the action at 2:59, represents a roughly 180 point plunge. In one minute!

The thoughts running through my head at that time - Shit, I just covered my short positions (I had), and orders are slow. SDOT, the main order routing system we use, had intermittent delays all afternoon. This means that when I sent an order to buy, instead of the usual sub-second turnaround, I had to wait something like 30 seconds. When the market was as active as it was yesterday, 30 seconds is forever. So no, I didn't break the bank yesterday.

One of the most viewed vids on YouTube is 5 minutes on CNBC yesterday. This was on all the televisions in the office, so you can see below what was on all around us. One trader started shouting "Citigroup!" as a 15 million share block trade went off (so he said, I can't see it). Everything fell off a cliff at once, probably as large sell programs hit the markets when as a new low was made. People started standing up. The guy behind me flicked his hands like Ali G. The conversation went like this:

me: you killing 'em?
him: I covered just before this.

In other words, the sell-off was so rare, that he was celebrating a market move that he wasn't involved in. Then the market just gapped down. That NEVER happens.

There is going to be a follow up post, the premise of which is going to say that a LARGE reason that the move happened in the way it did was the recent implementation of Hybrid (i.e. electronic) trading on the NYSE, which has only rolled out in the last few months. I'll also probably edit this post to add drama, but I'm trading currently, and trying to rush this out.

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