It's all 'Rigged'... FBI Probes High-Speed Trading.

Nothing to see here. We knew it already.

BOOK: It's all 'Rigged'...

"Stock market's rigged. The United States stock market, the most iconic market in global capitalism is rigged."
"Michael Lewis is not talking about the stock market that you see on television every day. That ceased to be the center of U.S. financial activity years ago, and exists today mostly as a photo op. This is the stock market that Lewis is talking about; the one where most of the trades take place now, inside hundreds of thousands of these black boxes located at more than 60 public and private exchanges, where billions of dollars in stock change hands every day with little or no public documentation. The trades are being made by thousands of robot computers, programmed to buy and sell every stock on the market at speeds 100 times faster than you can blink an eye. A system so complex, it's all but invisible."


FBI Probes High-Speed Trading...

"Among the activities being probed is whether high-speed firms are trading ahead of other investors based on information that other market participants can't see.

Among the types of trading under scrutiny is the practice of placing a group of trades and then canceling them to create the false appearance of market activity. Such activity could be considered potential market manipulation by encouraging others to trade based on false orders.

Another form of activity under scrutiny involves using high-speed trading to place orders to conceal that the transactions are based on an illegal tip."

Betcha the Boyz can find nothing going on here. They already cleaned up the place.

Edited by Rogerdodger, 31 March 2014 - 11:37 PM.

Its almost ironic 87 was blamed by many on computer trading.

Even if this isn't policed somehow I just have to wonder if its going to create enough fear that it will be policed to create a downdraft - or maybe I'm naive and it will bolster confidence that the market can never collapse. I can't get past this today.........Fed printing + HFT.......withdrawn = empty marketplace It makes Maddoff look like a microscopic tinkerbell..

Edited by libs, 01 April 2014 - 12:29 AM.

The access to information is one thing, sending our messages in response to others is another. If you have access to the customers buy and sell orders, you can also react faster. There is even a bigger issue. The member firms can slip ahead of everyone in level-2. Any edge you think you have by accessing the information is already gone because some of the members will cut in front of the line. The entire venue is illegal, the entire market place is worse than the casino because they can change their bets even after the dice rolled and it is about who gets the money first. This is why I stopped trying to compete with them and only focused on trading what cannot happen in the markets (option selling) or just the broadest movements (swing trading) when the odds are overwhelming. Short term intraday stuff looks like completely rigged now and your intraday success rate is slowly becoming random, many intraday tools simply don't respond the prices as they used to... Eventually, when you move out of that microsecond cosmos, the market starts to make more sense. Without the fed liquidity though, that microsecond cosmos can collapse very easily, it will happen, probably later this year...

The access to information is one thing, sending our messages in response to others is another. If you have access to the customers buy and sell orders, you can also react faster.

There is even a bigger issue. The member firms can slip ahead of everyone in level-2. Any edge you think you have by accessing the information is already gone because some of the members will cut in front of the line. The entire venue is illegal, the entire market place is worse than the casino because they can change their bets even after the dice rolled and it is about who gets the money first.

This is why I stopped trying to compete with them and only focused on trading what cannot happen in the markets (option selling) or just the broadest movements (swing trading) when the odds are overwhelming. Short term intraday stuff looks like completely rigged now and your intraday success rate is slowly becoming random, many intraday tools simply don't respond the prices as they used to... Eventually, when you move out of that microsecond cosmos, the market starts to make more sense. Without the fed liquidity though, that microsecond cosmos can collapse very easily, it will happen, probably later this year...

Exactly... I hope HFT systems are eventually banned. Why these companies were even allowed to go public is astonishing to me. A business which has access to information everyone does not, and given preferential treatment to basically be a middle man taking pennies from every trade. They don't even provide liquidity.

Among the activities being probed is whether high-speed firms are trading ahead of other investors based on information that other market participants can't see.

Among the types of trading under scrutiny is the practice of placing a group of trades and then canceling them to create the false appearance of market activity.

Another form of activity under scrutiny involves using high-speed trading to place orders to conceal that the transactions are based on an illegal tip.

60 Minutes runs an idiotic story about a book written by a hack who is trying to make a buck and people actually believe it?

No wonder people lose money. Of course, there always, always has to be an excuse for loses, but this one is just as useless as the next.

First, everyone already knows that HFT platforms see order flow and trade ahead of it. For what? .001/share? .0001/share? .00001/share? Big deal. HFT by its nature involves a holding period approximating zero. Has no one heard of limit orders? If you don't want to possibly get screwed over for some minuscule fraction, don't enter market orders.

Second, entering and then canceling orders fools no one with active brain cells. Executed trades matter, but to what extent they matter is called into severe question because "volume analysis" can't distinguish what fraction of any period of time's (minute-day-week-month-year) volume is meaningless HFT trades versus buyers/sellers taking a position for a reason other than for a millisecond scalp.

Third, trying to obfuscate insider trading is probable meritorious as is all so-called "insider" trading. Anything that gets prices more in-line with real value more rapidly is a good thing. I may hate Martha Stewart, but only for lying to the FBI, which is what she was convicted of, not insider trading. I'd also convict her for hawking bad taste, but that's not a crime.

HFT provides liquidity and only screws those with no patience. Don't want to get screwed for a tiny fraction? Don't enter market orders. Simple as that. Even at that, the few times I've used market orders I've never paid or gotten anything other than the bid or offer I hit. No "disappearing" orders. Ever. Even on size.

HFT trades -- in and out in a millisecond or two -- mean nothing in the grand scheme of things. Only trades by people committing money for what they think represents something that will increase or decrease in value over days or weeks or months or years matter. Just as it always has.

Dotdotdot I think you are mistaken if you think their impact on the market is nothing. Everything has an impact on the markets. The volume HFT represents is a lot higher than you think, the liquidity they are trimming from the markets is also a lot larger than it appears. I suppose you want to see their profits per year. I am fairly certain it is in the 10s of billions, they generally scalp the broad institutional trading than just one stock...

Dotdotdot I think you are mistaken if you think their impact on the market is nothing. Everything has an impact on the markets. The volume HFT represents is a lot higher than you think, the liquidity they are trimming from the markets is also a lot larger than it appears. I suppose you want to see their profits per year. I am fairly certain it is in the 10s of billions, they generally scalp the broad institutional trading than just one stock...

I cannot remember the HFT company that went public, but I recall reading they only lost money 1 day in 5+ years. Their net income was in the billions (should be verified).

I hope people don’t start to think that corruption on Wall Street is limited to hft trading. I am amused that apologists are attempting to narrow the discussion down to only price changes within less than a second.

Among the activities being probed is whether high-speed firms are trading ahead of other investors based on information that other market participants can't see.

Among the types of trading under scrutiny is the practice of placing a group of trades and then canceling them to create the false appearance of market activity.

Another form of activity under scrutiny involves using high-speed trading to place orders to conceal that the transactions are based on an illegal tip.

60 Minutes runs an idiotic story about a book written by a hack who is trying to make a buck and people actually believe it?

No wonder people lose money. Of course, there always, always has to be an excuse for loses, but this one is just as useless as the next.

First, everyone already knows that HFT platforms see order flow and trade ahead of it. For what? .001/share? .0001/share? .00001/share? Big deal. HFT by its nature involves a holding period approximating zero. Has no one heard of limit orders? If you don't want to possibly get screwed over for some minuscule fraction, don't enter market orders.

Second, entering and then canceling orders fools no one with active brain cells. Executed trades matter, but to what extent they matter is called into severe question because "volume analysis" can't distinguish what fraction of any period of time's (minute-day-week-month-year) volume is meaningless HFT trades versus buyers/sellers taking a position for a reason other than for a millisecond scalp.

Third, trying to obfuscate insider trading is probable meritorious as is all so-called "insider" trading. Anything that gets prices more in-line with real value more rapidly is a good thing. I may hate Martha Stewart, but only for lying to the FBI, which is what she was convicted of, not insider trading. I'd also convict her for hawking bad taste, but that's not a crime.

HFT provides liquidity and only screws those with no patience. Don't want to get screwed for a tiny fraction? Don't enter market orders. Simple as that. Even at that, the few times I've used market orders I've never paid or gotten anything other than the bid or offer I hit. No "disappearing" orders. Ever. Even on size.

HFT trades -- in and out in a millisecond or two -- mean nothing in the grand scheme of things. Only trades by people committing money for what they think represents something that will increase or decrease in value over days or weeks or months or years matter. Just as it always has.

I concur