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| China Minzhong Daily |
Once in a while something like that happens to remind me why I quit trading equities. This stock got screwed by a short seller (similar to what happened to Olam) and dropped 50+% in a single day to its all time low. No matter how much one sucks at trading, reading charts or fundamental reports, nobody deserves to lose that much just like that. My heart really goes out to the retail investors who are affected, especially those who placed their hard earned money in the stock. It is exactly moves like this that potentially leads to suicide cases. Note that the shitty cash market brokers in Singapore do not provide stop loss orders, so unless you're trading CFDs or happen to be around when that spike happened, chances are you'll incur losses so big it'll take many winning trades to recover. So yep you can be a damn good trader, killing the markets and having a decent win rate. All you need is to get hit by one of these every few months and a big dent will be created in your account. The damage will not only be financially but psychologically. There will be a huge sense of unfairness and indignance coupled with discouragement. And mind you this happens far more often than one would like to believe. In the case of CMZ, at least it was a spike down so some people might still have got out in time either via stop or market orders, albeit with huge slippage. Most of the time though news is released when the markets are closed and huge gaps can occur overnight. Your stop loss order will not protect you then.
One might argue that huge spikes/gaps can occur in your favor too. I agree, but as a trader I'm more concerned about managing my downside than hoping for the big break.
Oh and did I mention that if you were short before the trading halt, the gap up today would have wiped out your account overnight? Welcome to the world of equities.
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