Lesson 6 of 6 · 8 min
A crash, replayed
Crashes are fast. The point of this lesson is not to predict one. It is to see how your own orders behave in one, with nothing at stake.
The replay plays recorded candles back at x1, x5 or x20. The Flash crash scenario rewrites part of the tape: a drop of roughly 8% over a handful of candles, then a partial recovery. The history underneath is real, the crash is synthetic. Treat it as a drill, not as a record of an event.
Before you press play, hold some BTC and put a stop-limit sell under the price. Then watch. Three things can happen. The stop triggers and your limit fills. The stop triggers, the price blows through your limit, and you are still holding. Or the price never reaches your stop. All three are normal. Where you place the two prices decides which one you get most often.
Run it again with the stop closer, then farther. A close stop gets hit by ordinary noise. A far one costs more when it finally works. There is no free setting.
Your turn
Replay the crash with a stop in place
- Open the replay with Flash crash selected and load the session.
- Pause. Buy a small amount of BTC at market, then place a stop-limit sell about 3% under the price.
- Press play at x5 or x20 and watch what the stop does when the drop arrives.
What you just learned
A stop only helps if it was placed beforehand, and where you place it is a trade-off, not a safety switch.