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Shorting futures is the safest way to trade them intraday.
Actually, this strategy (of only trading the ES from the short side intraday) may have some validity, completely removed from the perspective of trading imminent catastrophe.
Specifically, if you sum and compare:
1. The cumulative profit of buying the SPY* on the close of trading and selling at next day's open;
2. The cumulative profit of nuying the SPY at next day's open and selling it at the close.
* I use the SPY as a proxy for the intraday ES since it opens and closes at "normal" trading times.
Depending on your lookback period, you should see the #1 generates much more profit than #2. This doesn't mean that stocks don't go higher in phase 2, but that if you're going to take a short position, it's better to do when the NYSE is open then when it is closed.
All one has to do is to look at a recent chart of the ES, to see the disparity between the direction in the price of ES in the RTH session versus the ETH session. In fact, the correlation between overnight and subsequent daytime changes is app. -7.2%. …
nevertheless, the op's premise as originally stated, is inherently ridiculous
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During 911 , the markets were closed for a few days, if I remember, so it can happen..but very rare.
I think he / she means if disaster strikes and the market stops trading, then a stop loss would be useless.
if that would happen, of course it depends where your stop is. if not too far away you might get lucky and stopped out before the markets comes to a halt. with a large stop you might not...
Diversification is important if you want to talk about safety during a black swan event. Stop placement or long/short on any one product or position is really just a small portion of the equation.
That doesn't make your stop useless though, typically it turns to market order and fills at a crappy price. What the OP is talking about, or the way I took it, is that whatever you are trading would slide so hard and fast that your stop wouldn't get filled even at a market offer. That's why I say for price to move there has to be buyers and sellers. Bid and ask may spread some and give crappy fills but I'm thinking a 50 tick move would be pretty major and that shouldn't clean out an account. But I have been wrong before
