Painting the tape

I

illiquid

I know it's not legal, but how difficult is it for 2 people on completely different platforms in different parts of the country to arrange purchases and sales to color the tape?

Isn't this something the boys at goldman sachs do all day long? :)
 
You can definitely tell some people have a license to paint the tape... on dead days those institutions get really creative, hell, they even do it to get orders filled. ever see a huge bid come in, and then have all these refreshing sellers come in in front of it, and refresh for huge amounts, when in the context of how the stock was trading it made no sense for A) a large seller to come in with that reserve, and then B) a large buyer to buy that much there, and theyll make you think someone just sold 60,000 shares so that everyone fills a 30,000 share bid, but you notice that bid gets filled really slowly... weirdly... sometimes the whole order doesn't even get filled, then the market moves violently upwards and all that selling that was there before is gone. I'm not talking about when a buyer accumulates in front of alarge offer and lets the daytraders take it out, just so he can get a better vwap... i'm talking about tape painting.

The best advice i can say is learn to recognize when price action looks "fishy" and indordinately manipulated, and just stay away... tape painting or not. There is no way you can win. In trading you want to be the house. When you sense tape painting it means the house is in control. It's tough though, sometimes they paint those perfect setups so well that it's almost impossible not to get suckered in.

A classic trick they pull is paint a morning setup in the afternoon
 
What happens if they get caught playing that game? I don't mean by the authorities, I mean if somone's shows a huge bid or offer and gets swiped for it all unexpectedly? I can't see that they'd have to cover in panic, if it was goldman sachs they'd probably come back with double the size lol.
 
Quote from illiquid:

What happens if they get caught playing that game? I don't mean by the authorities, I mean if somone's shows a huge bid or offer and gets swiped for it all unexpectedly? I can't see that they'd have to cover in panic, if it was goldman sachs they'd probably come back with double the size lol.
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well that's not tape painting, that's just orderbook faking... but yah, they come back, it's a game of BP. It also depends who hits them. If SAC hits GS they may well just panic and say fuck it. But if you hit them they always fuck you. You can't win. When there's huge fake size on both sides of the market, you just can't win.

If they get lifted or hit, they'll also probably use heavy tape painting... like, they get filled on a 50k offer, they'll market down 50 cents and turn on their tape painting robots to make the stock look horrible.

If worst comes to worst, they have to use their equity analysts to get their clients to take the other side of the trade.
 
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