A big Fat [Finger] lie more like it

[Nesti (Mark)]

The agencies said they had found no evidence that the market decline was caused by so-called fat finger trading errors, or by computer hacking or terrorist activity. They added, however, “we cannot completely rule out these possibilities.”

Oh-Gee, no kidding!

http://www.nytimes.com/2010/05/19/business/19crash.html


Let me guess...it wasn't a "Fat Finger" error in trading at all; it was more like a ramping-up on the High Frequency Trading (computer trading algorithm) selling 'Short' which caused the stock drop.

http://www.youtube.com/user/MaxKeise.../0/2-PihbVN6O4

[renormalised (Carl)]

GIGO...that's what it was. You beaut trading macro + someone with hives

[Nesti (Mark)]

The culprit barely gets a mention here. It's like, we'll just mention it so you know that we know what the real cause was, and hopefully you'll back-off on ramping-up in the future.

"The government found that there was also a heavy reliance by investors on automated orders to sell at the market price once stock prices had declined by a certain amount."

What most people don't seem to get, is that High Frequency Program Trading is still in its infancy, and trade transactions are currently only tiny amounts, but huge numbers of transactions, but they're allowed to run 24/7 unlike standard [human] trading.

Also, only a couple of years ago there was a successful push to drop the Fire-Walls at the US Stock Exchange and allow these 24/7 High Frequency Program Trading servers access to the Exchange and indeed global markets, even though the Stock Exchange is actually closed. Even at just 1 cent per transaction, the trading algorithms could create a market movement (which is illegal but they say it creates liquidity) which then allows Wall Street [human] Trades to exploit those trends immediately when the bell rings. They can do this because they are able to monitor the progress of the market trends which they in fact created during the night; they simply pull metric stats off their own servers.

This is how half a dozen companies have been able to trade 65 days straight, pulling an average of US$25M per day, without a single loss! This is 'Skimming' the cream off the markets, it is not creating anything.

The algorithms themselves not only look for trends, they look for accelerating trends, and can create them too. As a stock falls, the program commences its trades. This can cause the stock's decline or rise to accelerate. The algorithm can then place bigger and bigger transactions which further accelerates the stock's decline/rise; this is the ramping-up which they have not yet done, but which I believe was attempted on 6th May.

Imagine what can happen if High Frequency Program Trading opens up the throttle (Ramping-up) where each trade transaction jumps from only a few cents, to thousands of dollars per transaction; 5-10 companies running High Frequency Program Trading at a million trade transactions per minute has the capacity to collapsing everything.

Now apply that scenario to the either the Bond Markets (you can't do it to currencies), or worse, the [10 times global GDP] Derivatives Market. Remembering, the servers can trade across almost any market simultaneously.

Whether markets are stable and strong, or weak and fragile (today's case) is immaterial, this is a proverbial gun to the market's head.

[renormalised (Carl)]

Well, if they're stupid enough to try this out and it bites them back, that's their fault. Just means a few more corrupt, greedy idiots take a plunge off their high rise balconies or put a gun to their heads and pull the trigger. But the sorriest thing to come out of this is if things go belly up, it'll be Mr and Mrs Joe Public who's going to come out of it the worst.

When you think about, what they say is true...much of the market is being dictated to by jokers who are basically sociopaths. They have no concept of right or wrong, few if any real morals and will do anything to serve themselves and their perceived company interests.

These types should never be allowed to get into positions such as these. They're too dangerous and they don't care about anyone else but themselves.

[Nesti (Mark)]

'Speak of the Devil', the Gekko is Back!
http://www.youtube.com/watch?v=2OMHE...eature=related

[renormalised (Carl)]

Originally Posted by Nesti

'Speak of the Devil', the Gekko is Back!
http://www.youtube.com/watch?v=2OMHE...eature=related

That should be good....and compulsory viewing because the real life characters in the business are even worse than those two.

You notice how these pictures come out when finance and economics are in the headlines and greed in these institutions is rife.