Ratigan nails how "dark pools" rip off traders: Dark pool trading = 10% of volume
- Thread starter ByLoSellHi
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1) You or I can pay and do that too.
2) They do not see the order flow first.
3) see #2
4) and the present it seems
2) They do not see the order flow first.
3) see #2
4) and the present it seems
No but I did learn to trade after 5 years of steady losses and blowing out several trading accounts... took me a while and I kind of figured some things out... and now I'm lucky to make a living doing something I really love. That's all. Not bragging sorry if it came off that way... just wanted to let you know that I'm not guessing about some of these things.
Dark Pools don't report Time and Sales information immediately.
Therefore, anyone trading within the reporting period, are denied crucial market information that would obviously influence their trade (for or against). Applies to scalpers, day-traders and swing. In the case of a day-trader going long when a big 'dark-short' just went through (but won't show up on T&S for another 15 mins), well, he'll probably get screwed, won't he?
Its assumed Dark Pools offer better pricing on volume. You confirmed they do. Why shouldn't a trader bidding at .51 not get the same .49 just offered to GS ? Those pennies clearly add up.
Your point about Large and Smaller funds, I already addressed in the post above.
You're arguing against a level playing field. Don't fool yourself.
A level playing field is all we can aspire to.
Justifying bigger fish screwing smaller fish is exactly the same mentality that's led to Corporate Syndicates buying Government. America is about to get flushed from unending bubbles, offshoring, wars-for-profit and the Big Guys are always protected, in a lot of cases empowered by Government to take even bigger risks, on the Little Guys dime!
Why are you arguing against a level playing field?
You are truly an idiot.
Even GS itself has admitted it was front-running. When GS asked the investigators to find out who had stolen its front-running software, GS said: If anyone has access to our software, he will be able to "manipulate the market in an unfairly way."
Hilarious! GS is like a car thief who goes to the cops and complains that someone has just stolen his tools for breaking into cars: "Officer, someone just stole my self-made magic tool, if anyone has possession of the magic tool, he will be able to steal cars easily."
You know what's more hilarious? The cops said: OK, Mr. Johnson, we will go and arrest the person who stole your magic car-stealing tool, we won't let you down.
Similarly, SEC and FBI said to GS: OK, Mr. Big Investment Bank, we will go and arrest the person who stole your front-running software, we won't disappoint you.
Both the cops and SEC/FBI refuse to see the biggest thief standing right in front them!
I'm arguing against two things: 1) unnecessary and ill conceived regulation of the markets and 2) against this strange mentality that anyone who is making money and doing well enough to become big is corrupt and immoral.
Dark pools generally do report at time of trade or within a few seconds. I don't know enough about the mechanics to know why the prints are delayed sometimes. It's very obvious that they are delayed when there are large prints outside the NBBO. I daytrade NYSE listed stocks and no, I don't get screwed when a big order goes through the dark pools. If I go long at the exact instant a large short goes off in the dark pool the impact on my trade is exactly NOTHING. I will see the print maybe up to a minute later when it will be a strange large off market print that I know is reporting late... it won't impact the price of the stock or the outcome of my trade in the slightest. How would it? How would the daytrader get screwed?
Dark pools do not offer better pricing for volume... they minimize market impact. If someone dumps a large block of stock on ISLD and it drops the price of VLO $2 then your Grandmother's stop order working with her broker could get hit. If that same large block was crossed in a dark pool without market impact then everyone is happier, right?
It's never a level playing field... it is MUCH closer now that the markets are electronic and more of the volume is off the floor. The markets have never been better for the public than they are right now. You have no idea the kind of BS that happened on the floor and that, for the most part, is history. Be realistic... it's not a level playing field. Removing dark pools would actually hurt the public. Most HFT traders are not large banks.. they are medium sized funds or even individuals running these things at home (sometimes with colocation but not always).
There's just not a huge issue here.
i hate to get sucked into these internet arguments. I remember seeing a cartoon where the wife was asking the husband to come to bed and he said "I can't yet... someone on the internet is wrong!" So easy to get sucked into that lol.
Dark pools generally do report at time of trade or within a few seconds. I don't know enough about the mechanics to know why the prints are delayed sometimes. It's very obvious that they are delayed when there are large prints outside the NBBO. I daytrade NYSE listed stocks and no, I don't get screwed when a big order goes through the dark pools. If I go long at the exact instant a large short goes off in the dark pool the impact on my trade is exactly NOTHING. I will see the print maybe up to a minute later when it will be a strange large off market print that I know is reporting late... it won't impact the price of the stock or the outcome of my trade in the slightest. How would it? How would the daytrader get screwed?
Dark pools do not offer better pricing for volume... they minimize market impact. If someone dumps a large block of stock on ISLD and it drops the price of VLO $2 then your Grandmother's stop order working with her broker could get hit. If that same large block was crossed in a dark pool without market impact then everyone is happier, right?
It's never a level playing field... it is MUCH closer now that the markets are electronic and more of the volume is off the floor. The markets have never been better for the public than they are right now. You have no idea the kind of BS that happened on the floor and that, for the most part, is history. Be realistic... it's not a level playing field. Removing dark pools would actually hurt the public. Most HFT traders are not large banks.. they are medium sized funds or even individuals running these things at home (sometimes with colocation but not always).
There's just not a huge issue here.
i hate to get sucked into these internet arguments. I remember seeing a cartoon where the wife was asking the husband to come to bed and he said "I can't yet... someone on the internet is wrong!" So easy to get sucked into that lol.
HFT is not front running... do you know what that software actually does? Do you know what an algo is used for? It's not "front running software" LOL.
"At an industry conference on market structure in May, a panel on market centers broached the subject of "flash" orders and almost ended in fisticuffs. In one corner was defending champion William O'Brien, CEO of Direct Edge. In the other was Larry Leibowitz, his hot-under-the-collar opponent from the Big Board...The head of U.S. execution and global technology at NYSE Euronext assailed Direct Edge's Enhanced Liquidity Provider or ELP program as the "enhanced look" program, comparing it to the advance look at orders that NYSE specialists used to get. That practice was seen as giving specialists unfair advantages over other market participants, and potentially disadvantaging order senders.
Wait, Flash orders, enhanced looks... What?
From the article:
Flash orders are also called "step up" or "pre-routing display" orders. The rationale for these order types is simple: Better me than you. They allow a venue to execute marketable orders in-house when that market is not at the national best bid or offer, instead of routing those orders to rival markets. They do this by briefly displaying information about the order to the venue's participants and soliciting NBBO-priced responses. [TD: frontrunning is not quite the right word here, but it fits so damn well] If there are no responses, the order can be canceled or routed to the market with the best price."
Its front running. I usually buy stocks market order to allow for fast execution since I am not worried about a few pennies. However, I have seen reports of limit orders where the price has traded down below the limit and then come back up without the order being filled. So who stole the order? I would assume its GS.
Also, on some future orders where I notice my stops always fill but sometimes price will hit the target but not get filled. Again, GS is f$%king with us.
Wait, Flash orders, enhanced looks... What?
From the article:
Flash orders are also called "step up" or "pre-routing display" orders. The rationale for these order types is simple: Better me than you. They allow a venue to execute marketable orders in-house when that market is not at the national best bid or offer, instead of routing those orders to rival markets. They do this by briefly displaying information about the order to the venue's participants and soliciting NBBO-priced responses. [TD: frontrunning is not quite the right word here, but it fits so damn well] If there are no responses, the order can be canceled or routed to the market with the best price."
Its front running. I usually buy stocks market order to allow for fast execution since I am not worried about a few pennies. However, I have seen reports of limit orders where the price has traded down below the limit and then come back up without the order being filled. So who stole the order? I would assume its GS.
Also, on some future orders where I notice my stops always fill but sometimes price will hit the target but not get filled. Again, GS is f$%king with us.
Sigh... even the explanation you just published does not describe front running... and no one stole the order lol. It is possible for one ECN to trade through a limit on another... for instance imagine a world with only ARCA and ISLD... ARCA is best bid at 80 ISLD is bid 79. It is possible for someone to hit the ISLD 79 without filling ARCA 80.
This also is what your flash explanation addresses. If ISLD (I'm using the two best known ECNs just for simplicity here) gets a limit order to sell 80 it theoretically will be crossed to ARCA buyer at 80. (As I just said in the paragraph above that doesn't always happen, but it should.) If the order is flashed to ISLD it gives ISLD participant a chance to fill the order there rather than routing it to the ARCA bid. That is NOT front running. It also is not technically exactly correct... it's a bit simplified from reality but it's close enough to explain what is going on.
This also is what your flash explanation addresses. If ISLD (I'm using the two best known ECNs just for simplicity here) gets a limit order to sell 80 it theoretically will be crossed to ARCA buyer at 80. (As I just said in the paragraph above that doesn't always happen, but it should.) If the order is flashed to ISLD it gives ISLD participant a chance to fill the order there rather than routing it to the ARCA bid. That is NOT front running. It also is not technically exactly correct... it's a bit simplified from reality but it's close enough to explain what is going on.