Pairs Trading

I wasnt trading when September 11th 2001 happened. And im sorry to bring it up as it may be a sensitive subject to some.

I am a swing trader and its crossed my mind when i go out during a trading day that if some kind of terrorist activity occured, what would i need to do to keep my losses small.

My question is this. Say your hold a $10,000 long stock in the QQQ or DIA position and the news comes out of a terrorst attack on a large scale similar to that mentioned above. (Touch wood).

What the hell do u do? if u have a stop loss its likley to hit it and sell the stock. but how would u guys view a situation like this

Look on the bright side.....if you're long in the market and they catch Bin Laden, you're laughing....... http://static2.trade2win.com/boards/...s/icon_lol.gif

If something contrary to your position, long or short, happens; you just have to hope that your stop-loss is tight and gets filled promptly (which is in doubt if the market 'spikes' in either direction... http://static2.trade2win.com/boards/...n_confused.gif )

Regards

edit - and if your position is 'in the money' use a trailing-stop to protect profits.

you have a fair point on that. but like the capture of sadam. the market rallied in the morrning then closed lower.

A terror attack is likely to have more of a long term effect on price right?

Read up on pairs trading that has been talked extensively on this site by Grey1. If you are able to do this then market direction becomes irrelevant.

"what would i need to do to keep my losses small."
Obey your rules - it doesn't matter what the cause is when your stop is hit :-)