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04-21-2015, 01:22 PM
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#1
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PA Steward
Join Date: Mar 2001
Location: Del Boca Vista
Posts: 88,504
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This is kind of interesting...
Hot off the Dow Jones news wire:
Quote:
A U.K. man was arrested on Tuesday on U.S. charges that he contributed to the May 2010 "Flash Crash" in which the Dow Jones Industrial Average plunged 600 points, the Justice Department said.
Navinder Sarao is in the custody of U.K. authorities and faces charges of fraud, manipulation and a high speed trading practice known as "spoofing," the agency said.
Mr. Sarao also faces charges from the U.S. Commodity Futures Trading Commission , which claims he played an integral in contributing to the Flash Crash.
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Who knew it was that easy to move billions of dollars in under half an hour...
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04-21-2015, 01:24 PM
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#2
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PA Steward
Join Date: Mar 2001
Location: Del Boca Vista
Posts: 88,504
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Kind of makes you wonder why it seems they never found out who was behind all those prescient pre-9/11 options trades in airline stocks...or did they find out and report it was all a coincidence? I seem to remember something like that...
But they caught this guy?
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04-21-2015, 01:38 PM
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#3
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PA Steward
Join Date: Mar 2001
Location: Del Boca Vista
Posts: 88,504
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More detail:
http://www.cnbc.com/id/102573733
If this "lone wolf" with his own trading company was getting away with this kind of thing for so long, just imagine the tricks the "big boys" are getting away with right now here at home...
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04-21-2015, 02:45 PM
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#4
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Veteran
Join Date: Aug 2005
Posts: 3,428
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I had just read another Bloomberg article which mentions "spoofing" which kind of reminded me of the horse racing complaints of "late bet cancellations".
I hope these POS whether in financial markets or horse racing get what they deserve.
http://www.bloomberg.com/news/articl...crash-i8rkkccm
Quote:
... "Spoofing and layering involve submitting market orders with no intention of filling them, with a goal of pushing prices in a direction favorable to a trader’s strategy." ...
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04-21-2015, 04:47 PM
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#5
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Veteran
Join Date: Feb 2013
Location: Washoe County, Nevada
Posts: 2,253
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I would be extremely afraid to the point of being unable to invest if I believed a single person could have caused the flash crash in 2010. But I don't.
There is no doubt the guy was behaving badly. But the idea that a single trader did this is ridiculous. There was a lot more that contributed to that incident.
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04-21-2015, 05:28 PM
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#6
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tmrpots
Join Date: Jun 2008
Posts: 2,285
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Quote:
Originally Posted by PaceAdvantage
Kind of makes you wonder why it seems they never found out who was behind all those prescient pre-9/11 options trades in airline stocks...or did they find out and report it was all a coincidence? I seem to remember something like that...
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Do you have a link for this?
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04-21-2015, 06:07 PM
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#7
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Registered User
Join Date: Mar 2007
Location: Manhattan
Posts: 3,826
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Quote:
Originally Posted by whodoyoulike
I had just read another Bloomberg article which mentions "spoofing" which kind of reminded me of the horse racing complaints of "late bet cancellations".
I hope these POS whether in financial markets or horse racing get what they deserve.
http://www.bloomberg.com/news/articl...crash-i8rkkccm
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Another horse racing example would be putting some early money on a horse to suggest back stretch betting then putting in the big bet on another horse, late.
In financial markets, it can be a fine between legal and illegal. You're not supposed to "deceive" the market; yet, one of the most common algo trading strategies is to break up a large trades into smaller pieces as to not tip off the market. That said, with most day trading being algorithmic, I don't even know if that strategy is even useful anymore.
__________________
“Life does not ask what we want. It presents us with options”
― Thomas Sowell
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04-21-2015, 07:28 PM
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#8
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Veteran
Join Date: Aug 2005
Posts: 3,428
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Quote:
Originally Posted by badcompany
Another horse racing example would be putting some early money on a horse to suggest back stretch betting then putting in the big bet on another horse, late.
In financial markets, it can be a fine between legal and illegal. You're not supposed to "deceive" the market; yet, one of the most common algo trading strategies is to break up a large trades into smaller pieces as to not tip off the market. That said, with most day trading being algorithmic, I don't even know if that strategy is even useful anymore.
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I don't consider this market manipulation. Since, I don't think I could ever place a large enough order which would move the market, I don't have to worry about submitting smaller trades (pieces).
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04-21-2015, 10:04 PM
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#9
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Veteran
Join Date: Feb 2013
Location: Washoe County, Nevada
Posts: 2,253
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Quote:
Originally Posted by whodoyoulike
I don't consider this market manipulation. Since, I don't think I could ever place a large enough order which would move the market, I don't have to worry about submitting smaller trades (pieces).
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I think what BC is talking about is a strategy used by larger institutions. Imagine you run Fidelity Magellan or some other multi hundred billion dollar fund. You want to establish a new position in a small cap company. Do you stomp in all at once with a 1,000,000 share order (which, BTW is a fraction of a fraction of a fraction of a percent of your total holdings) on a stock that trades 800,000 on a heavy day?
Or do you bleed in smaller orders?
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04-21-2015, 10:42 PM
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#10
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Veteran
Join Date: Aug 2005
Posts: 3,428
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But, is this really considered market manipulation?
You're actually buying the stock in an attempt to not adversely affect your market price compared to artificially manipulating the stock price in the hopes of dumping it or not even planning to buy it.
I think there are several other methods to legally manipulate a stock's price e.g., the "investor" who buys a large stake in a company and then announces it prior to the S.E.C. quarterly filing requirement.
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04-21-2015, 10:46 PM
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#11
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Registered User
Join Date: Mar 2007
Location: Manhattan
Posts: 3,826
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Quote:
Originally Posted by _______
I think what BC is talking about is a strategy used by larger institutions. Imagine you run Fidelity Magellan or some other multi hundred billion dollar fund. You want to establish a new position in a small cap company. Do you stomp in all at once with a 1,000,000 share order (which, BTW is a fraction of a fraction of a fraction of a percent of your total holdings) on a stock that trades 800,000 on a heavy day?
Or do you bleed in smaller orders?
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In both cases, the traders are concealing their intentions.
One guy is canceling orders; the other is feeding them to the market a little at a time.
__________________
“Life does not ask what we want. It presents us with options”
― Thomas Sowell
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04-21-2015, 10:58 PM
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#12
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Veteran
Join Date: Feb 2013
Location: Washoe County, Nevada
Posts: 2,253
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Quote:
Originally Posted by whodoyoulike
But, is this really considered market manipulation?
You're actually buying the stock in an attempt to not adversely affect your market price compared to artificially manipulating the stock price in the hopes of dumping it or not even planning to buy it.
I think there are several other methods to legally manipulate a stock's price e.g., the "investor" who buys a large stake in a company and then announces it prior to the S.E.C. quarterly filing requirement.
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I don't think it is. You don't think it is. And it doesn't appear BC thinks it is.
I think his point was the fine line.
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04-22-2015, 06:55 AM
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#13
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Registered User
Join Date: Mar 2007
Location: Manhattan
Posts: 3,826
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Quote:
Originally Posted by _______
I don't think it is. You don't think it is. And it doesn't appear BC thinks it is.
I think his point was the fine line.
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That's exactly my point.
That said, intra-day trading is a completely different game. There's no investment objective. It's a game in which computers fight over tiny price fluctuations.
What that trader was doing is just a tactic, no different from an NBA basketball player faking a shot to get the defender to react.
It's illegal if the authorities say it's illegal.
__________________
“Life does not ask what we want. It presents us with options”
― Thomas Sowell
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04-22-2015, 01:36 PM
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#14
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PA Steward
Join Date: Mar 2001
Location: Del Boca Vista
Posts: 88,504
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Quote:
Originally Posted by barn32
Do you have a link for this?
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It's all over the internet...just google 9/11 options trading
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04-22-2015, 05:43 PM
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#15
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Racing Form Detective
Join Date: Jul 2007
Location: Lincoln, Ne but my heart is at Santa Anita
Posts: 16,316
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Quote:
Originally Posted by badcompany
That's exactly my point.
That said, intra-day trading is a completely different game. There's no investment objective. It's a game in which computers fight over tiny price fluctuations.
What that trader was doing is just a tactic, no different from an NBA basketball player faking a shot to get the defender to react.
It's illegal if the authorities say it's illegal.
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CNBC has had several "experts" on trying to say whether what he did was illegal. There was no real conscious other than it probably violated a 1920s New York state law. Otherwise it was one said they had a case and another said they did not. I can not see him being extradited.
__________________
Some day in the not too distant future, horse players will betting on computer generated races over the net. Race tracks will become casinos and shopping centers. And some crooner will be belting out "there used to be a race track here".
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