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Posts Tagged ‘algorithmic trading’

Here Come da Feds: New Trick to Manipulate Market

Posted by Larry Doyle on March 6th, 2013 7:20 AM |

I recently received a message from friends in the market apprising me of the newest “trick” being used by those who like to move/manipulate markets. What are the wizards up to?

Let’s get the inside scoop on what is really going on within our equity markets from our Sense on Cents Hall of Famers Joe Saluzzi and Sal Arnuk at Themis Trading. They recently sent out the following:

From Themis Trading: A new phenomenon is sweeping the equity market. It’s called the Fake Tweet Mini Flash Crash. (more…)

“You’re Playing with Sharks”

Posted by Larry Doyle on July 22nd, 2010 6:20 AM |

Is it safe to go in the water? In other words, is it safe to play in the markets under the current construct? Do small retail investors truly stand a chance against the ‘big boys’ on Wall Street running high powered algorithmic trading programs and assorted other high frequency trading mechanisms? Are fundamental traders being thrown around amidst the ‘high waves’ and ‘strong surf’ pounding the shore?

No doubt, the scene on Wall Street has changed dramatically over the years. The onslaught of high frequency trading complete with a wide array of ‘bait and tackle’ such as flash orders, dark pools, naked access, co-location, and much more make it extremely challenging — if not downright daunting — for those who believe they can navigate these waters with simple ‘rod and reel.’ (more…)

No Quarter Radio’s Sense on Cents Welcomes Back Joe Saluzzi

Posted by Larry Doyle on May 22nd, 2010 10:00 AM |

UPDATE: This episode of NQR’s Sense on Cents with Larry Doyle has concluded. You can listen to a recording of the episode in its entirety by clicking the play button on the audio player provided below. Once the audio begins, you can advance or rewind to any portion of the episode by clicking at any point along the play bar.

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What really happened in the markets on Thursday May 6th? Can regulators truly address the underlying issues that caused the ‘flash crash’ or are our equity exchanges fundamentally and structurally broken?

How can you protect yourself in the face of such unbelievable volatility? Who benefits and who loses in the face of this volatility?

Will circuit breakers proposed by regulators work? Will we witness more days like May 6th?

If you have any interest in our markets and our economy, you will not want to miss my show this Sunday evening from 8-9pm ET as No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Back Joe Saluzzi. >>>> (more…)

High Frequency Trading: Point-Counterpoint

Posted by Larry Doyle on July 17th, 2009 6:12 PM |

High frequency trading activity has become a very hot topic both on and off Wall Street. My trading instincts tell me that this activity is not productive for the long term health and well being of the market. I have referenced the work of Joe Saluzzi and his colleagues at Themis Trading in making the case for the prosecution.

In an attempt to present a case for the defense, I searched and found commentary written by Sang Lee, managing partner at Aite Group. Lee recently wrote for Advanced Trading, In Defense of the High Frequency Trading Community:

Various potential regulations, including the reinstatement of the uptick rule and transaction tax directly threaten the business model of the high frequency trading community.

Sense on Cents counterpoint: The uptick rule required short sellers of stock to only transact at a price higher than the previous trade. Our friendly Investing Primer, Investopedia, informs us:

This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1 and was implemented in 1938. The uptick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines.

The rule worked fabulously for almost 70 years before being discontinued in July 2007. It was discontinued in an attempt to promote trading volume on the exchanges and in turn increased fees.

Sang Lee writes further in making his point:

In recent years, growth of alternative electronic trading venues has been driven by a multitude of factors: the introduction of decimalization; the adoption of FIX as the main protocol for electronic communication; the availability of technology for developing market infrastructure conducive for electronic trading; the rapid adoption of electronic trading; the adoption of algorithmic trading; and the availability of co-location services.

Sense on Cents counterpoint: Fairly obvious with all of the technological advancements that we are not looking at your grandfather’s “buying 100 shares of IBM.” Modern day trading activity is both fast paced and high energy. Little wonder why it has become so much more driven by technical analysis than fundamental valuations. (more…)






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