modern asx market sting - careful

They are called stoplosses and I believe the ASX needs to hold an enquiry into how it will stop them being used to rip off retail investors.

Here is how it works.

Pick a decent ASX 200 or ASX 300 stocks which has had a decent run but from which the major insto support has taken a breather.

You need it to have only moderate volume relative to its shareprice, be currently lightly traded and relatively thin buy depth. If its shortable then even better because you wont need physical stock.

Around mid morning or lunchtime when things have quietened off hit it with enough stock to cause a 10% plus plunge in the shareprice.

You should reasonably expect that this will be enough to trigger a cascade of stoploss sales which will inturn trigger stoplosses set even lower down. All this will happen in less than a minute or so.

Then cover your position as low as possible - skill required there.

The ASX needs to prove in my opinion that the Australian market is sufficiently liquid in all stoplossable stocks to prevent this form of deliberate manipulation being performed to fleece punters.

It truly is a modern Sting.

Comments anyone?

Cheers,