The flash crash of 2010 was bad for me. I had a stock with a large profit, that I was losing enthusiasm for, but felt it still might go up. So instead of selling, I put in a stop loss order about 20% below the market, thinking that if there were further appreciation, I would get it, and if it started drifting downward I would at least get out before all my profits were lost. A trailing stop strategy like this is good for high flyers - just keep bumping up your stop order as the stock goes higher and higher.
But what happened on May 6 undid all that. Like many other stocks, mine plunged way down for a while, stopping me out, and then closed near where it opened. My feeling is that the stop no longer worked because the specialists and market makers who used to not let things like this happen, are no longer there. There's just the order book and it may be thin. On the flip side, a far off the market G.T.C. limit order starts to look attractive.
Now the S.E.C. is on the job and they have insisted on "circuit breakers" that halt trading in these situations. A little too late for my trade.
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