NYSE is rigged by high frequency traders...wow!

[Julian]

Anyone else watch 60 Minutes tonight? Fascinating story about how high frequency traders have rigged the stock exchange by running their own fiber optic lines to get ahead of other traders, buy in advance and sell back to those placing an order. Legally.

http://www.bloomberg.com/news/2014-...ripping-off-investors-michael-lewis-says.html

http://www.iextrading.com/about/

 

[Magic]

What a shocking revelation!

 

[Julian]

What a shocking revelation!

I would have thought that of all things, the security on the markets would have been iron clad. But this isn't apparently a security issue, simply a technology loophole that the High Frequency Trading business has grown up around! Making 100's of millions of dollars of all of us! Apparently you aren't suprised....I am.

 

[Magic]

I would have thought that of all things, the security on the markets would have been iron clad. But this isn't apparently a security issue, simply a technology loophole that the High Frequency Trading business has grown up around! Making 100's of millions of dollars of all of us! Apparently you aren't suprised....I am.

No. not surprised..... High frequency front running has been going on for years. I don't try and beat the pros, just ride along with them for a little while.....

 

[jdonalds]

Its been going on for years. No big revelation.

A lot of discussion has occurred on the subject. Does it hurt the overall market? The jury is still out in that one.

If it increases the price of a stock you buy it is likely only by a fraction of a penny per share.

 

[BoaterGuy]

Its been going on for years. No big revelation.

A lot of discussion has occurred on the subject. Does it hurt the overall market? The jury is still out in that one.

If it increases the price of a stock you buy it is likely only by a fraction of a penny per share.

I think it's bigger than that. These HFT hedge funds can move securities/bonds/commodities in any direction by flooding them with derivatives or option trades that win on both sides. They can also cause temporary crashes that cause all of your stop outs to trigger. They also have access to see what the stops are set at and drive the price down to pick them up and knock you out of the market.

http://www.forbes.com/sites/halahto...ricas-big-banks-are-knee-deep-in-derivatives/

Derivatives are, in fact, a zero-sum game – for each party that makes money on a transaction, another loses money. As such, derivatives risk is alive and well – with $223 trillion in bets outstanding, most counterparties probably hope that nothing goes wrong.

Gross world product is only $45 trillion.... that means that the big banks are 5 times leveraged on output alone. Any significant reduction in output could easily trigger the dominos.


Here is an example:
http://www.zerohedge.com/news/five-...ivative-exposure-morgan-stanley-sitting-fx-de

And another:
http://www.zerohedge.com/news/2014-...an-owns-over-60-notional-all-gold-derivatives

I'm sure im only scraping the surface on this.

I like this site for alternative financial news and whistle blower type info:

http://www.zerohedge.com/

A couple other good sites:

http://viableopposition.blogspot.com/
http://seekingalpha.com/analysis/all

 

[Julian]

I love the fact that IEX has figured out how to prevent them from Frontrunning, but it is strange that non-digital front running is illegal, yet digital is not. Smacks of manipulation to me...which as they pointed out, reduces trust in the market.

 

[Magic]

I love the fact that IEX has figured out how to prevent them from Frontrunning, but it is strange that non-digital front running is illegal, yet digital is not. Smacks of manipulation to me...which as they pointed out, reduces trust in the market.

Yeah there's not much of that trust thing there to begin with...... But every few years greed overcomes fear and rationality, and another investing generation learns its lessons the hard way......

 

[Shuck Water]

Good thing I put all my money into my boat....