How to vaporize 10% of your net worth overnight? Use a standing stop loss order.
That was the experience of investor Gary Pinder according to reporters Mary Pilon, Karen Blumenthal and Jason Zweig.
Mr. Pinder set a stop loss order that was 20% below the latest high price on his position in the Vanguard Total Stock Market ETF (VTI). During the flash crash on May 6, VTI fell sharply and Mr. Pinder’s stop loss was executed well below his order price.
According to the reporters, insult was added to injury when VTI’s price rebounded to well above the level of Mr. Pinder’s original stop loss order.