I am not new to the investment business but from time-to-time things happen that need to be addressed and to this end I am seeking the assistance of the Stockopedia subscribers. Over the years I have noticed that too many investors are put off using stop losses because they are taken out unexpectedly. Obviously, this will happen if a company issues an adverse report or the market as a whole turns quickly negative or in the case of commodities a natural disaster occurs which effects that particular stock etc and all of that is acceptable.
In my own case I was invested in a Sugar ETF which over a few seconds dropped its bid by 15% and immediately returned to the previous price, thus taking out all stops between the two prices. My complaint went to the ombudsman who concluded that the broker, who I have the utmost respect for, acted correctly and were not responsible for the actions of others and therefor had no case to answer. The ombudsman also pointed out that they were unable to adjudicate on market abuse, which was the core of my complaint and said that the broker has stated that the event was caused by “an order driven stock”, executed “off book” and that “a number of orders were removed from the order book which caused the bid/offer spread to widen significantly”. It would be helpful if any reader can explain the real meaning of, or has experienced of, the statements in quotes.
If as I believe someone simply swept the market at a price fifteen percent below the then current bid price for no other reason than possibility of excess profit, I would like to put a case before the Stock Exchange and Regulator that this is a market abuse and should be outlawed.
Clearly no stop loss is safe to do the job it was designed to do if this action continues to prevail.
Your help would be appreciated
