Specialist manipulation

Quote from Option Trader:

Based on what your saying (including your last message), it may be either the programmed traders, or the specialists who do the job. What I mentioned does not require they initiate a downtick, rather only to scare away buyers with showing gigantic asks, which also "requires" others to sell at the bid to pull out of their positions, letting the retail folks to drive it down themselves.
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FWIW, we teach our new traders that "price goes to size" - big offers are often only put up if the seller is pretty sure there are plenty of buyers. The old adage "no buyers at the bottom, and no sellers at the top" tends to ring true. If I'm long, and all market conditions being equal, I like to see a bigger offer....and watch all the newbies sell a penny below the offer, have the buyer take the penny better stock and all the offer, leaving those penny shorts to chase the stock up a nickel or dime to cover.

A specialist won't show a false "gigantic ask" for many reasons, mostly regulatory.

Don
 
Quote from Dustin:

This happens all the time...usually it's just the specialist backing off the bid or ask for a short time to sort things out or to print a large block somewhere in that range. It can also be an error price on the bid/ask.

This is all part of the "fair and orderly" process, and if you trade NY then it's up to the trader to know what's going on.

Most likely in your example NY ended up bringing the bid right back to normal , or printing a block within 5-10c of the last NY price. Any ECN's that panicked and sold at worse prices were probably inexperienced traders that lost money on the trade.
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Dustin is correct. I worry more about the OTC stocks that continue to trade, moving dollars down then back up after realizing the "news" was phony. NY will likely stop trading rather than have those big swings. But, as we all know, much of this is changing rapidly...gotta stay up which is taking a lot of time these days.

Don
 
Quote from Don Bright:

Generally the reason for going 1 x 1 (locking the book) is to cut off the ECN function for a minute so that they can properly match a large number of shares without electronic interference. With the hybrid system, they have kept this ability. The call it "slow market" (I would think it would be "fast" market, but ??anyway). This allows the Specialist to over-ride the algorithyms for a a minute or two.

The crossed markets are another thing altogether, but essentially serve the same purpose of not allowing orders in for a second.

don
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thanks vm for the info Don. i just don't understand why they would need to do this, who it really benefits. i mean why should one participant in the whole market be able to shut out anyone else even for a second as they attempt to match their orders. they're just one market center.

i guess the question is really about ecn 'interference', what would an example of that be?

it poses a real risk, if one market center has the power to lock out all the others at his discretion. what's to prevent abuse of this power under emergency conditions? i can't think of a rational reason why they should have it in a free market

they can cease my ability to exit a position at any competing mkt center, at will. why can't i shut him out when i feel like it.. they're supposed to add liquidity, not block it

thx again
 
Quote from Option Trader:

Based on what your saying (including your last message), it may be either the programmed traders, or the specialists who do the job. What I mentioned does not require they initiate a downtick, rather only to scare away buyers with showing gigantic asks, which also "requires" others to sell at the bid to pull out of their positions, letting the retail folks to drive it down themselves.
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watch the time and sales when see that happen, platforms have the ability now to buy 10000 and show only 100 or sell 5000 and show only 100 or 200, so when you see a huge size at the ask watch the bid and the time and sales sometimes theres only arca showing 100 shares but 1000s are going off on the time and sales and there might be 17k to buy on the bid and only 100 to sell on the ask but 1000s of shares are passing by, hes dumping on a show only and wants guys who trade the level 2 to dive in or out, you need to look at the pattern and support and resistance to try and figure out if theres a reason for him to dump, keep an eye on the time and sales and you'll see it all day long

think about it ,if you wanted to dump 17k shares would you show them all if you knew it would drive down the price or would you show a buy for 17k so guys would hit your 100 show only shares that your dumping because they think its going up

also they can use this to shake the tree just to force the last guys out, watch the charts you'll see times when this is happening, not always but this is one of the things I see
 
In the end of the day, if you see a huge ask and the bid is being chipped away too much, I don't think you care how it's happening, sometimes you just dump.
 
The biggest question I have is where in the world are the big institutions? These programmed traders seem to have no fear there will be any institution in the world to suddenly buy 30k shares of their stuff (even if the stuck has already been drilled down to real bargain prices) and they seem to more often than not be right.

E.g. DRL has big institutional ownership. You would think at least for window dressing purposes any one of dozens of inst's would want to support the price or to have an employee monitoring DRL for manipulation downwards, and then take out the ask. Yet this does not seem to happen. I'm wondering now if these big institutions have other accounts where they often have short positions in the stock even greater than the % ownership seen by the public.
 
Quote from cashmoney69:

Dee man wrote a great couple posts on this thread

http://www.elitetrader.com/vb/showthread.php?s=&threadid=3282&perpage=6&pagenumber=1

from what people are saying, it seems that trading NYSE stocks would be easier than nasdaq?...

cm69
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No way! Trading NYSE stocks is much harder and much more dangerous than Nasdaq for all I know. In nasdaq, you can get in and out easily without any interference. In Nyse you got the specialist spreading up and down all over the place; crossing the markets preventing you from executing on the ecns; and here's what happened to me in my effort to test hybrid stocks such as MA the past couple of days: I buy it at 84 and the stock is trading around 84 on nyse AND the ecn, and guess what..All of a sudden the pervert comes in with a bid of 83.60 and an ask of 83.63 crossing the ecns even though there are bids on the book...Thats an immediate 40 cent loss out of no where. This kind of nonsense never happens in nasdaq. Yes, stocks fall 40 cents in seconds, but it falls through all the bids. It doesn't just jump from 84 to 83.60 when there are bids!! Nyse is a BIG BIG mess. And maybe the hybrid isn't just what I thought it to be. Did anyone else see this nonsense in MA? I seem like the only one who sees this.... I mean if this is what hybrid is supposed to be then nyse traders are in for a big surprise.. I am beginning to wonder if the hybrid system's immediate fill has any value when the fills are just totally nasty.
 
ma is a nutz stock, i traded the sob ystdy and was in and long in premkt, sadly i got shaken out missin' on 7% juicy gains...but hell this is the bidu of nyse, pure crack rock, if u are not careful u can get hurt badly.
 
Your problem isn't the NYSE it's mastercard. The stock is too thin. If you want to day trade without huge spreads you have to trade a stock with some high average daily volume preferrable 25-50 million shares daily. Secondly preferrably under 50 dollars a share.
 
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