Same ol' same ol'...
Technocratic manipulation of the sheeple via occult (hidden) knowledge is hardly anything new.
Technocratic manipulation of the sheeple via occult (hidden) knowledge is hardly anything new.
Got Shock and Awe?
Posted on 07/24/2009 8:31:48 AM PDT by NMRed
It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.
It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.
Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.
(Excerpt) Read more at nytimes.com ...
“If true, it amounts to the same advantage as insider trading”
I’m sure that Goldman Sachs only uses their advanced information for the public good. It’s all we would expect from the D’s biggest private contributor. And the rules which allow them to do this were implemented in 1998, when Robert Rubin was Treasury Secretary.
Bullsh--. This claim is like saying that those who read Barron's or IBD are "insider trading" because they have more knowledge of the markets than the average Joe on the street.
The firms are simply paying a very large amount of money to get the same data feeds everyone else gets, but faster, and then paying a lot of expensive software engineers and quants to devise algorithms to take advantage of the speed. That's all.
The difference, as I see it, is that even I can afford Barron's or IBD, nor do Barron's or IBD manipulate prices in real time as the NYT article accuses the software of doing. It was not my original contention that this is insider trading, but please keep in mind that Goldman has admitted to federal prosecutors that its software is capable of manipulating markets, and that it uses this software for all of its trades.
Traders working for a firm have ALWAYS held an advantage over regular Joes. If you trade stocks you can pay a fee and receive level II which shows the stacked bid/sell prices. Some brokers offer level II for free if you trade thru them. Market Makers have always had access to Level III which is deeper, and yes they pay for it.
I have traded for over 10 yrs now, first stocks and then I switched to index futures. I always knew and still do that the pro traders have an advantage over me. Doesn’t mean I can’t make money though.
It's not the software oir its speed of execution, but whether you a deliberately moving the prices around without the intent to sell at that price.
The latter would be market manipulation, but putting small orders in where you are still exposed, even if you plan on cancelling them is not.
You guys know too that many MM's get paid in part based on the volume they bring to the exchange, so they get part of the exchange's transaction fees. This means they can deliberately make what looks like a 'losing' quote to pull in volume at a 'loss' that turns into a profit based on the transaction fees paid by the exchange back to the MM.
In brief, don't pick a strategy based on speed, unless you can invest $30 million in equipment & software to keep up with the big boys.
While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee.
Do you know _anyone_ who gets real-time data (let alone real-time book data) FOR NOTHING??
BTW, it isn't millesecond time intervals now, its microseconds.
Actually, that’s not what “high frequency trading” is, and Wall Street has been “peeking at customer orders” from the beginning. Going electronic just meant that, once they staffed up with Indian and Asian programmers, it was easier to do and harder to hide.
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