Trading on material nonpublic information by the big guys

well than maybe you just should have titled the post, "wah, i lost money". The point I was trying to make is that no system is fool-proof. Bottom-fishing, knife-catching, or anything else you want to call it can be dangerous as you found out today. Your "metrics" might not be fool-proof either.

Is your system 100%? Is everytime you get screwed by it an instance of trading on "illegal, inside, non-material information by the big boys"? The sooner you come to grips with the fact that your system will produce losers from time to time, the happier and more profitable you'll be. I'm not trying to bag on your system or style of trading, however, if you want to run with the big boys, you need to start acting like one. Save the "wah" for the wife or the dog....

Good luck and happy trading!
 
The Homebuilders are the best, day before the major earnings reports they sell off, gap down the next day on earnings and bounce as the players cover. I have observed this to be true almost every "dissapointing" earnings number since the first occurence with DHI back in 2nd half of 2004. It has become so predictable that I called the morning bounce this past report in early December. Too bad I slept in and never capitalized on it.

I will never forget WLT afternoon run back in the spring. Someone really wanted some stock and paid up 1-2 points for it without a care. 40 min after the close they raise guidance, stock gaps next morning does big block prints and sells off. Pulls back for like 2 weeks in fact, guess someone wanted to scalp some big blocks.

It's so blatanly obvious sometimes, it's sad.
 
Quote from Hydroblunt:

The Homebuilders are the best, day before the major earnings reports they sell off, gap down the next day on earnings and bounce as the players cover. I have observed this to be true almost every "dissapointing" earnings number since the first occurence with DHI back in 2nd half of 2004. It has become so predictable that I called the morning bounce this past report in early December. Too bad I slept in and never capitalized on it.

I will never forget WLT afternoon run back in the spring. Someone really wanted some stock and paid up 1-2 points for it without a care. 40 min after the close they raise guidance, stock gaps next morning does big block prints and sells off. Pulls back for like 2 weeks in fact, guess someone wanted to scalp some big blocks.

It's so blatanly obvious sometimes, it's sad.
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We prolly ought to stop complaining and start to take advantage of this, no?
 
Quote from Bitstream:

We prolly ought to stop complaining and start to take advantage of this, no?
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The first time I actually wrote to the SEC for kicks. Obviously zero response.

I missed the last obvious homebuilder bounce since I slept in but played the previous one cause I had a hunch. I think that trick is over but you never know. It's just a phenomenon I observed in homebuilders, probably a certain hedge fund(s) that tends to play the earnings play with their inside info for very lucrative gains. They obviously get more than just early numbers, Im sure they have well researched perceptions of the Street as well. I just think it's funny how it has happened so many times in almost the same manner.

The WLT one was great for me, that was a lot of fun to go along on the ride of heavy speculative buying. I got caught in the gap & crap though, I really thought some mutual fund would actually keep pushing on the guidance and keep buying on the public info.
 
It really gets me that almost every IFO release out of Germany is immediately preceded by insiders front-running the reaction on Eurex.

Sometimes the exact number is leaked to all the futures brokers half an hour beforehand, so I know people are getting this number early.

I can only imagine how you boys must feel when this stuff happens, but...

It is not optimal to prevent every crime in the world from ever occurring; therefore I think you have to accept that this is going to happen. Just try to be wary of it and hope that the perpetrators are brought to justice one day!
 
Quote from anomaly:


It is not optimal to prevent every crime in the world from ever occurring; therefore I think you have to accept that this is going to happen. Just try to be wary of it and hope that the perpetrators are brought to justice one day!
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I just think it's fucked up that the little guy will get raped if he gets caught ( and most likely will get caught). The big guys arent the only ones who can get insider info, it's the execution of it.
 
makes you wonder whether those "great" traders you read about are really just getting tipped off with info. (e.g., is SAC really that great given they front run broker upgrades and downgrades?)
 
Quote from soxfan04:

I was wondering if any of you could share your thoughts on this subject. As a longtime trader, I have always witnessed it, and doubt it will ever change.

Nevertheless, some examples are more egregious than others. Despite the money I spend on news services, I fully expect to be a few seconds to minutes late on most every news event...The big firms have incredible technology, direct lines to companies and analysts, and other sources which I don't. Still, this i can live with.

Other such instances make me sick. I took a hit in FXEN today on the Nasdaq. Looking through some technicals and other metrics, my partners and I decided it was ripe for a trade down between 12 and 15%, between 10 and 11 AM.

Now had a press release been issued by the company at that moment, I certainly would have had no issue with the losing trade...it happens all the time.

But when a release was made public by FX Energy over an hour later which disclosed a disappointing oil drilling project, I became enraged. I called FX, and the release was made public at 12:03, well after the suspicious trading in the stock took place. Furthermore, certain named market makers did seem to be flooding the market at what my partners considered to be an absurd price.

Please understand: I know that this may simply sound like sour grapes on my part, but I take losses of this size (and larger, unfortunately) numerous times throughout the year, and I never take issue with them.

But this situation was different: the number of shares going off after the company had shed 15% of its market cap, combined with the enormous time difference of over an hour before the news came public, have me infuriated.

I was just wondering if any of you had any thoughts, or if you had ever been tempted to raise this issue with someone other than your fellow traders in the past.

Thanks for any and all input.
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This happens all the time. All I do is fade big moves and know that if a stock is moving quickly there is news somewhere. Period.

I only fade stocks that make moves if I know why it is moving. Otherwise I don't trade it, although 80% of the time they still work. I learned the hard way by getting screwed on insider stuff.

Truth is, the only reason there is a market is so insiders can screw everyone. Why else would their be one??? Why would GS be around if they could not guarantee a profit??? It helped me a lot when I just took that as the "lay of the land".

John
 
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