Posted on 04/26/2013 8:09:36 AM PDT by jiggyboy
Tuesday’s brief and shocking market crash, which roiled stock and other financial markets, was triggered by language-reading software that got tripped up by such words as “explosion,” “Obama” and “White House.”
(Excerpt) Read more at marketwatch.com ...
Not mentioned here is the proof, yet again, that High Frequency Trading, well over half of the trading these days, completely failed as usual rather than providing the vaunted "liquidity" its proponents claim (i.e. lie) it exists to provide. Bids simply vanished, as they always do.
“7 Ways We Could Tell That AP Tweet was a Fake”
http://www.mentalfloss.com/article/50275/7-ways-we-could-tell-ap-tweet-was-fake
Well said... might add, welcome to instant gratification of world largest casino.
Like NYTimes, who is notorious for giving away secrets to the enemy. Dumb, Dumb & more Dumb
Ah yes...another CINO looking to destroy capitalism by regulating HFT. This website is full of anti-capitalists. Fortunately there are enough people who believe in capitalism to refute the ignorance that exists.
Lots of ad hominem, not too many facts or even assertions.
Your post implied you were opposed to HFT. If you are opposed to it, but seek in no way to regulate it then I take back almost everything I said and I apologize.
Options, futures, and HFT should be banned. Only live trading should be allowed - ie no computerized orders allowed.
No before hours, nor after hours trading; and no preferred trading stacked up at the start or at the end.
No special rigging of the phone gear, so that BIG gets thru instead of LITTLE.
I’ve been in this trading business for over 20 years.
The issue is not restricting what an HFT, or algo trading firm is allowed to do. The issue is one of transparency.
Dark pools account for more than 50% of the volume on any given day, yet those trades and their bid/ask is not available to the individual. It would be like playing No-limit Texas Holdem and not being able to see your opponents chip stack or how they played previous hands.
I can easily detect the games that are played when provided access to “ALL” the data.
HFT’s and some algo’s are simply out to jam up the retail trader/investor. They have moved into a new game of trying to “game” each other since the retail investor, for the most part, is not playing with sufficient size to make it worth while.
Here's what happens when half-assed text software feeds HFT: from the article "From A Twitter Hack To The Complete Evaporation Of All Market Liquidity In One Chart"
And here's a stock that went from $11 to $0 and back again in seven seconds yesterday, courtesy of HFT. Now that's a useful price discovery mechanism right there!:
I could quibble with you on options and futures (excepting that only as many contracts are written as actual stuff exists), but I’m with you on leveling the playing field in the other respects.
Abolished by who?
Why, by the Justice League of America, of course.
Let’s hear the case for why it exists and should exist, in a way that addresses the problems illustrated above.
Ok, breakfast time. I’ll address meaningful rebuttals later today.
Follow @nanexllc on Twitter.
This is not HFT.
It may be triggered by HFTs, but the this market action is a reflection of automated trading. Automated trading that includes individuals that have sell stops in a market that has virtually no bids underneath it.
If you look at the QLYS chart you can see that there was no real offers/ask pushing the price down. Only when it hit bottom did offers show up. The drop happened in a vacuum but the rally back was orderly, evidenced by the tight Bid/Ask spread. I wonder who was offering stock as the price hit bottom and began it’s rally, within 7 seconds. Whoever sold got jammed up pretty good.
In addition, trades that occur outside a certain % from the last trade within a certain time are busted under the rules. I apologize, that I don’t know the exact rule.
Given that, here is a game that could be played.
Again, using QLYS chart as an example.
HFTs push prices below the $10.00 level as to trigger sell stops, those sellers hit whatever bid is sitting there and those trades trigger more sell stops and the thing just goes on auto pilot. The sellers at $0.01 are the left over sell stops that had no place to go when the bid was zero.
BTW, the game is just getting started.
The offers that got taken on the way back up could very well be the algo’s selling to retail knowing full well that those trades would be cancelled. So, retail thinks they are long stock at a great price and when it recovers to within the collar they sell. The buys get busted because they are outside the collar but the sells that are back within are good trades. Those sellers are now short and need to cover by buying back the stock they just sold to the algos.
More on my previous post.
NASDAQ Says Will Cancel Trades in Qualys from 9:35-9:36 at or below $10.13/Share
As for the rule. It is a 10% move within a certain time.
At 09:35 the last price was $11.26. during the minute of 09:36, the price opened at $11.13, traded at 0.01 and closed that minute at $10.78.
So, if I got stopped out below $10.00 and was pissed and bought it back below $10.13 thinking I got back in at a decent price and since I now have a profit because the thing is now trading in the $10.80s or $10.90s, I sell for what I think is a quick profit. Only to find out later that my purchase was cancelled but my sell was not. I’ve got to buy the stock to cover my short since I never wanted to be short this thing in the first place. So now I’m buying the stock I just sold from the same guy that bought it from me when I thought I was taking a profit.
That’s one hell of a breakfast.
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