BROWSE

Gather In The Stops

What is 'Gather In The Stops'

A trading strategy of driving down a stock's price by selling large amounts of stock in order to trigger preset stop-loss orders, which in turn enhances the decline of the stock.

Explaining 'Gather In The Stops'

This strategy may seem confusing at first, but is actually rather simple. Gathering in the stops occurs when traders sell large quantities of stock with the intention of triggering stop orders. Once a set of stop prices is reached, new sell orders are activated and transacted, causing the stock price to fall once again. This effect is continuously repeated, triggering more stop orders and therefore a rapid decrease in the stock's price. Some exchanges may decide to suspend stop orders to mitigate this continuous effect.


Further Reading


Do some forms of financial flows help protect against “sudden stops”?
academic.oup.com [PDF]
… This article updates and builds on such studies to gather a more comprehensive range of … Note: Advanced economies are defined as in the IMF's World Economic Outlook, except for the … Sudden stops are a concept based on the net financial account, and crises and financing …

Optimal stopping with multiple priorsOptimal stopping with multiple priors
onlinelibrary.wiley.com [PDF]
… This article updates and builds on such studies to gather a more comprehensive range of … Note: Advanced economies are defined as in the IMF's World Economic Outlook, except for the … Sudden stops are a concept based on the net financial account, and crises and financing …

Dual financial systems and inequalities in economic developmentDual financial systems and inequalities in economic development
link.springer.com [PDF]
… This article updates and builds on such studies to gather a more comprehensive range of … Note: Advanced economies are defined as in the IMF's World Economic Outlook, except for the … Sudden stops are a concept based on the net financial account, and crises and financing …

Sudden flight and true sudden stopsSudden flight and true sudden stops
onlinelibrary.wiley.com [PDF]
… This article updates and builds on such studies to gather a more comprehensive range of … Note: Advanced economies are defined as in the IMF's World Economic Outlook, except for the … Sudden stops are a concept based on the net financial account, and crises and financing …

The virtues and vices of equilibrium and the future of financial economicsThe virtues and vices of equilibrium and the future of financial economics
onlinelibrary.wiley.com [PDF]
… This article updates and builds on such studies to gather a more comprehensive range of … Note: Advanced economies are defined as in the IMF's World Economic Outlook, except for the … Sudden stops are a concept based on the net financial account, and crises and financing …

Stopping rule use during information search in design problemsStopping rule use during information search in design problems
www.sciencedirect.com [PDF]
… This article updates and builds on such studies to gather a more comprehensive range of … Note: Advanced economies are defined as in the IMF's World Economic Outlook, except for the … Sudden stops are a concept based on the net financial account, and crises and financing …



Q&A About Gather In The Stops


What kind of market failure might occur due to information asymmetry?

Market failure may occur due to adverse selection and moral hazard.

What is gather in the stops?

A trading strategy of driving down a stock's price by selling large amounts of stock in order to trigger preset stop-loss orders, which in turn enhances the decline of the stock.

What is information asymmetry?

Information asymmetry is the study of decisions in transactions where one party has more or better information than the other.

What does a scale with one side being the seller and the other side being the buyer represent?

The scale represents that when the seller has more or better information, they will have an advantage over their counterpart.

Why would this lead to inefficient transactions?

This could lead to inefficient transactions because if both parties do not have equal knowledge about what they are buying, then neither party will get what they want out of the transaction.

What is gather in the stops called when it occurs on an exchange?

It is referred to as a flash crash.

How does gathering in the stops affect investors?

Investors can lose money if they do not have proper risk management strategies or exit strategies for their positions during this type of market volatility."

Who may decide to suspend stop orders?

Exchanges may decide to suspend stop orders.

How does gathering in the stops occur?

Traders sell large quantities of stock with the intention of triggering stop orders. Once a set of stop prices is reached, new sell orders are activated and transacted, causing the stock price to fall once again. This effect is continuously repeated, triggering more stop orders and therefore a rapid decrease in the stock's price.

How can you tell if there is an imbalance of power in a transaction?

If you are unsure about how much something is worth, it may be wise to ask for help from someone who knows more about it.