This is not a market to play around in. Seasoned traders are getting burned. High-frequency traders are eating their lunch.
The high-frequency guys are juicing the market with strategies like “banging the beehive,” “spoofing,” and the “Boston zapper.” The volatility is neck-snapping . “It was always going to be volatile, but at least if you had the right idea, you’d get paid for it. Now, you can put yourself on the line, but you’re flying blind,” said a seasoned trader recently about natural gas futures.
Stop orders are an area susceptible to flash crashes and high-frequency trading. If you place a stop order and happen to be away from your computer for a day or two or even a few hours in this market, look out. Imagine being stopped out when your position declines by 10% only to see the stock close the day with a gain. That’s the type of volatility taking place in some corners of the market, like natural gas futures, for example. What used to be a month’s worth of volatility is only taking minutes. The guys that are getting burned are the ones thinking they can time this thing. Flying blind is never a good flight plan.