"60 Minutes" Runs "H.F.T.S." story again on August 11, 2013

[Bob111]

jtrader33

if you do have programming experience and willing to spend some time in this particular field\game i can throw you some ideas\observations.
i've became too lazy and slowly drifting down(along with my profits,shrinking every day). not really in the mood to work on any new projects,but i do keep on paper all my observations(most of them not related to this HFT crap), but sometimes i see interesting stuff on entry\exit.

 

[Bob111]

Quote from jtrader33:


EDIT: Looks like this is a terrible idea...not very different at all ... http://www.securitiestechnologymonitor.com/news/norwegian-day-traders-arrested-25971-1.html I wouldn't try something like that without having it explicitly blessed by whoever polices that stuff.

here you go.. when timber does it-it's legal. when couple retail guys tried to do something similar-jail time for them. end of story. a perfect example. with that been said-there some other ways to use those observations. one of them would be an algo,that can estimate one simple thing-how hard for participants on bid and ask to buy or sell their shares and\or-which side is bluffing. (they all bluffing all the time on slow stocks,but 'typically' one side is more 'aggressive ' than the other.
another thing-like i said-if you look on T&S for this stock further-you will see how he done it it. now-what those norwegian boys did -might be classified as a some sort of pump and dump scheme,but there is nothing illegal,if you are spot such bluffing and trying to be on other side.(ie-selling those couple hundred shares at 12.1-12.11) or better than his price at ask,when spread is wide enough and bluffing on bid is identified.i'm pretty confident-it's possible to write such algo. you might not be able to get a fill,but this is totally different story

 

[rwk]

Quote from jtrader33:
EDIT: Looks like this is a terrible idea...not very different at all ... http://www.securitiestechnologymonitor.com/news/norwegian-day-traders-arrested-25971-1.html I wouldn't try something like that without having it explicitly blessed by whoever polices that stuff.

When I read the story, I didn't see anything the traders did that would clearly be market manipulation. Apparently the highest Norwegian court agreed, and the conviction was thrown out. http://gata.org/node/11316

 

[RedDuke]

Quote from rwk:

When I read the story, I didn't see anything the traders did that would clearly be market manipulation. Apparently the highest Norwegian court agreed, and the conviction was thrown out. http://gata.org/node/11316

Thank a lot for posting this. Makes me and I am sure other traders feel much better. This whole case was such BS. When I first heard about it, I could not believe my eyes.

 

[RedDuke]

Quote from Bob111:

you tell this somebody else. IMO-HFT is very vague\broad term and it can have many faces\ways. my definition of HFT is very simple-it's a set of technical and\or regulatory advantages of one participant over SOME other market participants. it could be anything,that i CAN't do. i can't place subpenny orders, i can't place a lot of orders and cancel them in same second. any retail broker will kick you out in same day after you try that. the list of ' i can't do's' can be very long.

i've been around for a while and i see it every single day that as the markets get dry(compared to where we are back in 2000-2005-2007)-'they' been tough on retail and willing to fight for every penny(or even a fraction of it). times are tough not only for retail,but for whole entire industry. it's a dog eat dog time.

Bob,

I think the issue is that retail traders are a much smaller group compared to retain investors. Retail investors for the most part do not care about HFT games.

 

[Bob111]

Quote from RedDuke:

Thank a lot for posting this. Makes me and I am sure other traders feel much better. This whole case was such BS. When I first heard about it, I could not believe my eyes.

same thing. imo-the accusations are ridiculous. Thank you Rwk for posting the resolution!
but on other hand-it got up to highest Norwegian court! i'm pretty certain that if timber pull this off in US-they will be in prison and no court would save them.

 

[rwk]

Quote from rwk:
When I read the story, I didn't see anything the traders did that would clearly be market manipulation. Apparently the highest Norwegian court agreed, and the conviction was thrown out. http://gata.org/node/11316

I don't know if y'all picked up on this:
But Mr Larsen said that the system was so flawed that "any rational investor could have done what we did in the same open and transparent way." The court said that the transparency of their trades was one reason for their acquittal.

I think Larsen was spot-on with his defense. The T-H algo introduced an inefficiency into the market by being predictable, and it's the traders' job to seek out and arb inefficiencies. That's the ultimate "secret" to trading: find and exploit the inefficiency. Without an inefficiency, there can be no edge.

Regarding HFT/algo, I don't believe all computerized trading, HFT or algo, is inherently evil. What I object to are people/companies having special privilege that gives them "guaranteed economics", as Haim Bodek calls it in his book: http://www.amazon.com/The-Problem-H...8357/ref=sr_1_1?ie=UTF8&qid=1376493935&sr=8-1. Everybody should be required to play by the same rules.

 

[RedDuke]

Quote from rwk:

.....
Regarding HFT/algo, I don't believe all computerized trading, HFT or algo, is inherently evil. What I object to are people/companies having special privilege that gives them "guaranteed economics", as Haim Bodek calls it in his book: http://www.amazon.com/The-Problem-H...8357/ref=sr_1_1?ie=UTF8&qid=1376493935&sr=8-1. Everybody should be required to play by the same rules.

Absolutely. If I can not sub penny, no other party should be allowed for example. The rules should be the same.

I read Bodek's book about a month ago. Very informative for outsiders. Still not sure, what was his rational for not pursuing the same strategies, once he learned about these special order types, as he had the means to do it.

 

[RedDuke]

My main interest is in index futures. Retail has better odds there, since most of HFT advantages are very limited due to one central trading venue and nature of future contracts.

 

[Bob111]

Quote from RedDuke:

My main interest is in index futures. Retail has better odds there, since most of HFT advantages are very limited due to one central trading venue and nature of future contracts.

you gotta be kidding...seriously.. yes, retail has better odds of their order being executed. i can agree on that part, but better odds of winning? yeah,right..