To Gunter K @ Commodity Trading Discussion Forum ,
I completely disagree with you that this spike on Nov 13th in ZG is made of legitimate trades. Simply because something has been executed on a computer exchange and a number of transactions have been registered in a database that can be tracked back and charted is neither proof nor hint that these transactions are valid or legal.
My understanding is that a trade is a mutual agreement, where both parties freely and voluntarily agree on the basis of a common understanding of clear unfalsified conditions and true statements. A unrealistic market price far away from fair-value in a thin overnight market is not providing the basics of unfalsified conditions and true statements ! A stop placed in any exchange traded instrument is placed under the implied condition that an execution should occur only when the market is trading at that price under regular fair market conditions and not on any artificial spike - that is what is being agreed with the placement of a stop order - and NOT : I want an execution if any screen shows any arbitrary price, no matter what ! The definitions for artificial spikes are found in CBOT's regulations. Everyone placing orders on a regulated exchange may rely on the exchange to make all necessary provisions that will assure an orderly market with fair balancing of offer and demand. That includes provisions to prevent market disruption by large orders in thin overnight markets. So I can assure you that my trade on this spike was not executed under the conditions I had agreed upon â I therefore will challenge it.
Further, if a trade is a result of an illegal action (manipulation or even fraud) or is a result of an unintended technical malfunction at the exchange it would never become a valid transaction in the first place. The problem is, you cannot tell from T&S or from the sequence whether any of this has happened and an investigation will have to uncover this.
You wrote :
> Had the exchange busted any or all of these legitimate trades, it would have put us back into the stone ages.
I believe in the exact contrary â not busting the trades is a remainder of the stone age. Read my other posts again, where I layout, why. On orderly market is a modern and desirable concept, demanded by the vast majority of market participants.
You wrote :
>Traders who deal in electronically traded contracts need to be aware of the weaknesses of electronic exchanges. During quiet trading hours, electronically traded contracts are an easy target for people who want to push prices around.
No, in contrary, never before were markets so well regulated and providing an equally fair environment than with modern e-markets â that is not a weakness, but robust strength. The fact that errors and artificial spikes are possible only demands for provisions to avoid them. Your proposal is to accept a faulty process and leave it alone - I don´t agree ! I trade many markets overnight, and most of them have become quite reliable, not letting gamers move them around at will. It takes good marketmakers and strict enforcement of trade bust rules.
You wrote :
>A trader who cannot deal with this, should not be trading these vehicles.
I agree ! But don´t worry about my loss, its just one of many other losses I take every week and by far not the worst one. But being able to deal with it also means that you are prepared to challenge illegal or unfair trades, or errors of your broker. But of course, you are part of the industry and I should not expect any support from you on this - it cannot be in your interest that people stand up and demand adjustments.
You wrote
>I personally rather deal with this problem, than have the exchange bust trades anytime they feel like it.
So if someone steels money out of my pocket (breaking the rules) while looking in my face (misusing trust), I should deal with it personally and should not ask it back. I am afraid I am not that blessed. But this spike is a fundamentally different scenario. It might be a resident problem that is to be resolved, not an individual case. By the way, they did indeed not bust the trades, just because they felt like it, and that despite their $4 trade bust rules.
That brings me to another point. Anybody executing trades outside the bust range of $4 (in ZG) must consider that they are likely to be canceled â that is fair â and is a clear statement giving sufficient warning for anybody trading there. Anybody looking for reliable trades, don´t trade in the bust-zone ! Because next time I will again pursue the trades to be busted. A trader who cannot deal with this, should not be trading these vehicles !
Finally I join you on that : anything we write and post here are our personal opinions and nothing more or and nothing less.
