I'm sure I'm not alone in that I trade with a disaster stop - in short, if price moves way beyond a normal range for that day's trading, a stop is there to catch it. It hasn't been used yet because it's several hundred pips away on typical EU intraday trades for eg.
So this is for those black swan events - central bank intervention, terrorist attack, collapse of a multinational bank. That kind of thing. But in these events, are disaster stops a good idea? Given traders tend to overreact first and retrace later, would I actually be safer without one? Ie- is the probability of price plunging and then retracing greater than plunging without looking back?
Anyone got any stats on black swan events? Or do I have to get my history book out and backtest?
So this is for those black swan events - central bank intervention, terrorist attack, collapse of a multinational bank. That kind of thing. But in these events, are disaster stops a good idea? Given traders tend to overreact first and retrace later, would I actually be safer without one? Ie- is the probability of price plunging and then retracing greater than plunging without looking back?
Anyone got any stats on black swan events? Or do I have to get my history book out and backtest?