Everyone’s talking about the technology issue at Knight Capital that had the market trading violently this morning and affected moves in 148 stocks.Think about it: Light speed trades with substantial volume going nuts. It’s like a massive ship capsizing and sending ripples through the sea.
So what if you’re in sailboat a couple hundred feet away? Do you get crushed by the waves or are you good enough to sail away?
We started talking to day traders about how they were navigating the markets this session. We wanted reactions, strategies, blog posts — any kind of chatter.
Daniel Speer, an equities trader in Dallas, sent us this lament from a day trading veteran in Florida. The Florida trader writes:
So today right on the market open a bunch of stocks started to trade very strangely…
Was it a liquidity issue? Broken Algos? Knight Capital Problems?
I don’t know.. I just know I had no edge trading… so I sat out for the most part and waited for things to get back to “normal”.
What if this is the new “normal”?
That’s the question — a brutal question. The conditions that made today’s glitch possible aren’t going anywhere. According to reports from CNBC, this isn’t a fat finger issue, it’s a computer issue magnified by the size of the player that made the mistake. None of that is going to change.
Speer himself said he was going to cover a position he has in Netflix, trade as little as possible and watch the FOMC decision.
“It (the trading glitch) means people can’t control their robots and they f*ck everything up, like the May 6th flash crash round two.”
And if this is the new normal, what’s a day trader to do?
“Quit, probably,” Speer responded. “Unless you’re a master.”
That’s it people, if this is the new world of trading, only masters need apply.