Didn't they set stoploss?

[kamikade]

A while ago, I read "The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It" and I noticed that there was one chapter talking about when the market was moving against quant strats in 2007. At that time, funds managers had to give order to their trader to manually selloff or deleverage their books. Today, I was in a discussion about stoploss and I recalled of the book.

I am just wondering why did not they set stoploss for their system? In case they did, so why their stoploss was so far apart? I mean the book mentioned that many firms were down 10% and their leverage was more than 10x, so why didnt their stoploss triggered?

 

[amanda.jayne]

Stop losses don't always trigger in the 'real world' - especially when liquidity dries up.

http://www.theglobeandmail.com/glob...en-stop-loss-orders-dont-work/article2069815/

I've experienced this firsthand. It is a rather unpleasant experience.

 

[chiadam]

This was across all their positions. They couldn't just set a global stop loss. Also, if the limits on the stop losses were getting blown through, they would keep missing the trade. Many of them also probably felt that they were losing because others were getting squeezed and being forced to unwind their positions, not because of a fundamental reason. Because of this, many probably were more interested in adding to their positions than in flattening out.