It is the kind of story old traders tell around the campfire: it starts with a big, long position in a stock, the price of which starts to slide. The trader’s reaction is to sell, and sell in size, but the market is spooked and the depreciation only accelerates. The trader is desperate to exit, selling more stock – and the price drops again – and this continues until the bottom, or bankruptcy, is reached.
The phenomenon is as old as markets themselves. According to one near-contemporary – though