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High Frequency Trading, Goldman Sachs, Stop-Loss Orders, and Accenture (ACN)

Imagine you had a stop-loss order in on Accenture for $36.  Average investors always put in stop-loss orders to prevent them from suffering a catastrophic loss on a stock.  Regular investors, however, do not have computer algorithms that can buy in sell the same stock every millisecond.  An average investor in Accenture literally had his stock stolen from himself today.  The stock dropped from from $41.09 to $.04 - triggering your stop-loss order at $.04.  After all, the stock didn't take a normal drop from $41.09 to $38.52 to $36.  Instead, it fell off a cliff to......Four cents.  One of Goldman Sachs' algorithm picked up your shares for four pennies in the second that your stop-loss order was triggered.  That the stock immediately returned to it's market value means nothing...continue to full post

Full post as published by Crime & Federalism on May 06, 2010 (boomark / email).