11–20 of 49 posts
Theory: 1) Short DJIA. 2) Pick some stocks and place buy orders at $0.01. 3) Get a friend to fill those orders for you at $0.01, taking the loss. Call it a trader error. 4) A lot of poorly written algorithms, which take into account the last traded price, start selling to cover their stoploss orders (sell if the price 5) Havoc ensues. DJIA is down. Cover your DJIA short and take the rest of the day off.
It's really fascinating (horrifying?) that some of these ETFs went to zero for a moment. I can't understand how they cancel all these trades though. Seems like the biggest accounting nightmare ever.
It actually seems like standard procedure. They reset the market after 9/11, too. Basically, it seems like any time something really unusual happens, it's an excuse to go outside the rules. Back when I was involved in digital gold currencies, this kind of thing seemed pretty standard across the board: banks would just reverse transactions, freeze accounts, etc, any time there was anything unusual, and it seemed like…
Theory: 1) Short DJIA. 2) Pick some stocks and place buy orders at $0.01. 3) Get a friend to fill those orders for you at $0.01, taking the loss. Call it a trader error. 4) A lot of poorly written algorithms, which take into account the last traded price, start selling to cover their stoploss orders (sell if the price 5) Havoc ensues. DJIA is down. Cover your DJIA short and take the rest of the day off.
Expect your trades will get reversed at the end of the day and you will not make any money.
Theory: 1) Short DJIA. 2) Pick some stocks and place buy orders at $0.01. 3) Get a friend to fill those orders for you at $0.01, taking the loss. Call it a trader error. 4) A lot of poorly written algorithms, which take into account the last traded price, start selling to cover their stoploss orders (sell if the price 5) Havoc ensues. DJIA is down. Cover your DJIA short and take the rest of the day off.
Assume the stocks you are manipulating are bid at 99.99, ask at 100.
3 - Your friend's first few sell orders at $0.01 or better are filled at about $99.99.
Your buy orders go unfilled.
4 - If your friend sold enough shares, the algorithms notice someone aggressively selling. They may undercut and sell at 99.99 or even 99.98.
The algorithms also place a few buy orders at 99.96-99.97.
5 - Your friend's trades (assuming he is placing multiple orders, and is selling a lot) execute and drive the price down to 99.96-99.97 or so.
6 - The algorithm's buy orders at 99.96-99.97, are filled by your friend's sell orders.
7 - Price back up to 99.99.
8 - Algorithms eventually sell the shares they bought at 99.96 at 99.99.
Sum total: the algorithms made a few pennies off your friend. Your DJIA short does pretty much whatever it would already have done.
Theory: 1) Short DJIA. 2) Pick some stocks and place buy orders at $0.01. 3) Get a friend to fill those orders for you at $0.01, taking the loss. Call it a trader error. 4) A lot of poorly written algorithms, which take into account the last traded price, start selling to cover their stoploss orders (sell if the price 5) Havoc ensues. DJIA is down. Cover your DJIA short and take the rest of the day off.
Practice. Assume the stocks you are manipulating are bid at 99.99, ask at 100. 3 - Your friend's first few sell orders at $0.01 or better are filled at about $99.99. Your buy orders go unfilled. 4 - If your friend sold enough shares, the algorithms notice someone aggressively selling. They may undercut and sell at 99.99 or even 99.98. The algorithms also place a few buy orders at 99.96-99.97. 5 - Your friend's trades…
Earlier quoted context omitted.
I still don't understand why anyone would put in a "sell at any price" order. If you sold Accenture at one cent because you put in such an order, well, you bought yourself a lesson to not do that .
Because they are treated differently on the market. Market orders (sell at any price) are handled first, and then, limit orders are. You can only guarantee one thing: either execution, or a price level. And when you're dealing with stop losses, you want to guarantee the execution in most cases.
Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
A lot of HF traders pull out in times like this for technological reasons. For example, most quotefeeds (such as Reuters, if my memory serves) have outdated technology that handles load really badly. When quotes are 5+ seconds slow, they're essentially useless, given that HF trading occurs on a millisecond timeframe. Most liquidity providers would love to be in the market when it's panicking, because this is a great…
Theory: 1) Short DJIA. 2) Pick some stocks and place buy orders at $0.01. 3) Get a friend to fill those orders for you at $0.01, taking the loss. Call it a trader error. 4) A lot of poorly written algorithms, which take into account the last traded price, start selling to cover their stoploss orders (sell if the price 5) Havoc ensues. DJIA is down. Cover your DJIA short and take the rest of the day off.
Practice. Assume the stocks you are manipulating are bid at 99.99, ask at 100. 3 - Your friend's first few sell orders at $0.01 or better are filled at about $99.99. Your buy orders go unfilled. 4 - If your friend sold enough shares, the algorithms notice someone aggressively selling. They may undercut and sell at 99.99 or even 99.98. The algorithms also place a few buy orders at 99.96-99.97. 5 - Your friend's trades…
Pretty interesting and weird. Some stocks lost 100% of their value in a matter of seconds. Some analysists say it was because some high-frequency traders pulled out when the market became too volatile and thus there were too few buyers.
A lot of HF traders pull out in times like this for technological reasons. For example, most quotefeeds (such as Reuters, if my memory serves) have outdated technology that handles load really badly. When quotes are 5+ seconds slow, they're essentially useless, given that HF trading occurs on a millisecond timeframe. Most liquidity providers would love to be in the market when it's panicking, because this is a great…
The exchanges are breaking a whole bunch of trades and algorithms can't predict which trades will be broken. So imagine an algorithm bought at the bottom and sold halfway up the recover of yesterday's spike. Their buy orders at the bottom get broken. Their sells halfway up do not.
To meet their obligations, the algorithm must buy again at fully recovered prices. The process of breaking trades has turned a big profit into a big loss.
Earlier quoted context omitted.
I still don't understand why anyone would put in a "sell at any price" order. If you sold Accenture at one cent because you put in such an order, well, you bought yourself a lesson to not do that .
Because they are treated differently on the market. Market orders (sell at any price) are handled first, and then, limit orders are. You can only guarantee one thing: either execution, or a price level. And when you're dealing with stop losses, you want to guarantee the execution in most cases.