Comments on: How to trade: Why butterflies cause cascading margin calls

By: HFT Blog » Blog Archive » How to trade: Why butterflies cause cascading margin calls

Fri, 04 Jun 2010 16:34:57 +0000

[...] to the phenomenon of the butterfly effect of cascading margin calls, which in my view is one [...]Read More… [Source: OlsenBlog] [...]

By: richardo

richardo — Fri, 21 May 2010 14:46:05 +0000

Yes, you are right. In addition to the margin calls, there are also the stop losses. The only difference is that margin calls are hardwired and stop losses can be fine tuned to suit the different market environments.

By: s5804

s5804 — Fri, 21 May 2010 12:10:47 +0000

appreciated this very much.

Question to example above.

Why margin calls and not just a bunch of stop losses?

Many long position with negative realized profit. Many shots are waiting were many stop losses are placed. A spike up in the stop loss area will trigger an avalanche of shorts.

Or are stop losses not powerful enough vs. margin call?

By: dave

dave — Sat, 06 Mar 2010 10:38:47 +0000

Yes the twitter comments are very useful, keep them up.

By: Gon

Gon — Wed, 17 Feb 2010 10:51:22 +0000

Many thanks for the insights provided with your blog. Don’t expect a “cascade” of followers, then this would be indicative your information being wrong (you know, the masses prefer wrong info). Instead, expect to have a few truly thankful followers.
The How To Trade section is awesome, keep doing it!

By: PC

PC — Wed, 10 Feb 2010 19:49:51 +0000

Great blog. I will definately add you to my blogroll as well as I will follow your twitter.

By: richardo

richardo — Fri, 05 Feb 2010 10:19:28 +0000

Thank you for the encouragement.

By: L

Thu, 04 Feb 2010 23:57:13 +0000

I follow your tweets with great interest. Both World and Scale.

Talking about real interest – Rome wasn’t built in a day.

By: GregE

GregE — Wed, 03 Feb 2010 22:28:10 +0000

Thanks for clarifying. Of course the underlying demand is (generally) not visible. I’ve only just started looking at Twitter but yes I think your comments on there are useful information. I hope that interest grows; although we traders are notoriously late adopters…

By: richardo

richardo — Wed, 03 Feb 2010 12:57:52 +0000

Thank you for raising this point: As we have seen during the past few sessions, AUD was under pressure. Precisely for this reason, there were many open long positions that were under water and had to be closed out further depressing AUD. I suggested that AUD would rebound, because AUD did not fall as dramatically as would have been expected under normal circumstances. The fact that AUD did not drop more was an indication for me that there is a lot of underlying demand for AUD. Just a question: do you find Twitter comments useful? I have been asking myself, if there is any real interest.