An unbelievable story about the NASDAQ today:

Firstoff, I have many systems and styles. I've been at it for a while. Because of that, I have many stories and a ton of situations I went through as the markets evolved (from the beginning of ECN's and on). Yes, I held alot of erroneous back in the old days when the markets were not effecient (before Supersoes and all of that).

I don't need any sympathy. I just think traders need to be aware of the MM crooks out there at this level. I know most traders already know, but this was a very unique story. I believe I got out relativly risk free and have no interest in pursuing anything for a lousy one grand.
 
Quote from Choad:

Some of you guys are being a little harsh on the OP. Doesn't seem like he was trying to scam anybody.

Sounds like he has an automated system and needs to fix it up. If your auto-order system is watching the bid/ask and waiting to enter the trade, poor liquidity, bad data, late quotes, etc, can easily bugger you up.
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How does an automated system accidently enter a buy order INSTEAD of a sell order?

If the system accidently entered ANY order at all, it would be understandable.

The OP stated the intent of the system was to enter a sell order at 150. And that's the question people have - why was he trying to sell at 150 when the true market was at 25?

As you can see, we don't get any answer to that question.
 
Quote from sigsegvboogman:


This morning (1-19-06) at 9:39:21 I by accident traded 200 shares of WBPRK. 100 shares long at 150 and 100 shares long at 151. Well, the POS normally traded at 25/share, but was extremely illiquid and had a bid - ask in the range of 25-155 at that moment. I originally wanted to place a SELL order as a limit at that price: Nothing close to market, but made the error.
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Okay. Reread the post and I guess I don't know what happened.

I had thought that his system triggered, for whatever reason, a Buy on the current ask of 150, then he wanted to Sell. So I guess I don't understand the original intent to sell @ 150... :(

Regards.
 
Quote from sigsegvboogman:

First of all, you have no idea what I was doing or why and i'm not about to go further into it.
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So I am curious. When you say you bought 100 at $150 and then 100 at $151, does that imply you entered two separate orders at those prices? Come on, fess up if you did. If you did, then it is doubly bad. Did you think you got filled at $150 and then you said "GREAT! LET'S TRY $151!!!!!!!!!!!!!!! GOING TO ANTIGUA!"?

Another thing, on a stock like WBPRK even though the specialist filled himself at a price $5 higher than "the market," what the hell is the market on that thing? There are 700 shares traded a day on it. Suppose there is news on WBPRK - how the hell is the market maker supposed to not take a gigantic loss on that piece of crap stock? There is absolutely no guarantee that the market maker will make money on those shares that you gifted him (most likely he will).

Again, from the story you've presented I feel like you got off easy.
 
Quote from sprstpd:

So I am curious. When you say you bought 100 at $150 and then 100 at $151, does that imply you entered two separate orders at those prices? Come on, fess up if you did. If you did, then it is doubly bad. Did you think you got filled at $150 and then you said "GREAT! LET'S TRY $151!!!!!!!!!!!!!!! GOING TO ANTIGUA!"?

Another thing, on a stock like WBPRK even though the specialist filled himself at a price $5 higher than "the market," what the hell is the market on that thing? There are 700 shares traded a day on it. Suppose there is news on WBPRK - how the hell is the market maker supposed to not take a gigantic loss on that piece of crap stock? There is absolutely no guarantee that the market maker will make money on those shares that you gifted him (most likely he will).

Again, from the story you've presented I feel like you got off easy.
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I agree he got off easy too. Had the trade stayed at $150 he loses $25,000. From his post of losing $1000 they apparently changed the buy to $30. And the avg. daily volume is a whopping 600+ shares. Historical data shows volume is zero many days.

http://finance.yahoo.com/q/hp?s=WBPRK

Why anyone would want to trade it is beyond me. And anyone who has traded for any length of time knows that stocks that are this thinly traded do have very wide spreads most of the time. When I looked at WBPRK yesterday the spread was $2.50 ($25.00 x $27.50). So to get the trade adjusted to $30 is making out okay.

And why would anyone intend to place a sell order at $150 if they knew that it would be busted if it went off? That makes absolutely no sense at all.
 
Quote from mnx:

http://www.nasdaq.com/about/RuleFilings/Filings2004.stm

The last post in the above link is NASD Rule 11890 (their guidelines are on page 5)

Anything over 3% from the nasdaq inside should have been busted. However in this case there was no Nasdaq inside?????????? What purpose do MM's serve? Are they there just to screw everyone over?

mnx
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Are there quote width requirements, as there are in options? A MM making such a market should be fined in the first place.
 
Uh...I think the main point is you learned a $1000.00 dollar lesson on why its important to pick stocks that have some sort of liquidity. Even 100K shareas a day. But less that 1000 a day, or zero? Cmon.

Trading 101....trade stocks that are liquid enough for you to trade your strategy. I f your strategy is playing a bid ask spread of 130 per share, then I guess a stock trading 800 shares a day is the perfect one. But is that how it really worked out?

You deserved this and further more, you got lucky on not taking a 20K+ loss. But from your posts you know this already.


The market maker is doing his job in a thin (if you could even call it ) market.
 
"The market maker is doing his job in a thin (if you could even call it ) market."

That's not what I call a MM doing his job. That's called "doing his job to rob". And no, I don't feel this is an issue where you need to tell me where and where not to trade. You do not know my styles, strategies and reasons for what I did and when. We all make errors in trades at one time or another: It happens. The question here for me is wondering where the investor protection really is. Screw the money.
 
Quote from DHOHHI:

I agree he got off easy too. Had the trade stayed at $150 he loses $25,000. From his post of losing $1000 they apparently changed the buy to $30. And the avg. daily volume is a whopping 600+ shares. Historical data shows volume is zero many days.

http://finance.yahoo.com/q/hp?s=WBPRK

Why anyone would want to trade it is beyond me. And anyone who has traded for any length of time knows that stocks that are this thinly traded do have very wide spreads most of the time. When I looked at WBPRK yesterday the spread was $2.50 ($25.00 x $27.50). So to get the trade adjusted to $30 is making out okay.

And why would anyone intend to place a sell order at $150 if they knew that it would be busted if it went off? That makes absolutely no sense at all.
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It appears the OP stumbled into the tiger pit he dug, which is a risk of setting such traps.
 
Quote from sigsegvboogman:

That's not what I call a MM doing his job. That's called "doing his job to rob". And no, I don't feel this is an issue where you need to tell me where and where not to trade. You do not know my styles, strategies and reasons for what I did and when. We all make errors in trades at one time or another: It happens. The question here for me is wondering where the investor protection really is.
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Agreed, we all make errors. But you said you were filled at $150 on 100 and $151 on the other 100. You also said they were limit orders, correct? The fact you erred and had them as buys instead of sells is 100% your responsibility. But what I don't understand, and posted earlier, is WHY you would even consider placing 2 such orders if you knew that they'd be busted. Why did you apparently intend to place sell orders $125 (500%) ABOVE the market? You know the market would not trade there. Completely illogical to me. Why wouldn't you place orders at or near the market if you're wanting to buy/sell/short/cover a stock?

And why wouldn't your intended sell order at $150 also be seen as a "job to rob". No way a $25 stock trades at $150. And I see no "strategy" or "reason" in placing an order so far away from the market and expecting it would possibly execute.
 
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