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Mysterious Algorithm Was 4% of Trading Activity Last Week

CNBC: A single mysterious computer program that placed orders — and then subsequently canceled them — made up 4 percent of all quote traffic in the U.S. stock market last week, according to the top tracker of high-frequency trading activity. The motive of the algorithm is still unclear.

The program placed orders in 25-millisecond bursts involving about 500 stocks, according to Nanex, a market data firm. The algorithm never executed a single trade, and it abruptly ended at about 10:30 a.m. Friday.

“Just goes to show you how just one person can have such an outsized impact on the market,” said Eric Hunsader, head of Nanex and the No. 1 detector of trading anomalies watching Wall Street today. “Exchanges are just not monitoring it.”

Read more: http://www.cnbc.com/id/49333454



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OK so lets just say this is a

OK so lets just say this is a ingenious scam(but not a scam)

lets say 25ms interval that would be 4 trades a second. lets say each trade goes up $0.01 per trade. program the algorithm to only trade when a 1 cent profit is made. first trade $505, 510.5, 515.10, 520.30(first second)... $20 profit first second. after 120 trades(30 seconds) of 1 cent increments, $1650.19.

It just trades so fast and has a computer scanning it. I doubt there is a law against it yet(i have no clue).

*****edit i might have done some math wrong but w/e if it was only 500 stocks a trade it would be $20 every second.

Quote Stuffing.

It is quote stuffing or latency arbitrage. The fake quotes are offered and then pulled away before they are filled which can sway the price. Meanwhile an insider who knows what the computer is doing can buy or sell depending on the direction of the equity. Zero Hedge has documented thousands if incidences since 2009.

The court case against JPM Chase for manipulating the sil-ver market had these charges, among others, in it with evidence that they swayed the silver price with this method meanwhile capitalizing on it. But, of course, the case was dismissed.

The sil-ver market is easily pushed around like this since it is such a tiny market. When volume is light, mainly between 6 and 7 PM EST Sunday or between 6 and 8 each morning, there are multiple cases whereby silver and consequentially, or as well as, gold plummet(big banks are chronically short), decoupling from oil and inversely the USD, without corresponding news. The JPM court case charges actually located the venue from which the quotes came from. It was a place solely set up for this purpose.

http://www.zerohedge.com/news/will-nasdaq-be-next-casualty-s...

You can profit on the volatility

If you by futures in the VIX index which monitors volatility (volume) you an manipulate that index in this way to profit on those futures.

Use things not People. Love People not things.

Really?

How so? If I am quite certain that silver will go down at a particular time, what and where should I place my bet?

The VIX- Volatility Index

As a financial advisor; and highly repugnant to Federal Reserve funded schemes; there ARE legitimate arbitrage opportunities; however You're not "influencing" anything by buying and selling the VIX; you're simply betting that the market itself will be more volatile. This is clearly a manipulation to those who have level 2 or 3 NASDAQ access (They can see ALL quotes and take advantage of an erroneous quote. It's only possible with inside knowledge; and thus is only available to those who have special FINRA & NASDAQ clearance.

Bet You

Max Keiser could tell us what it was!

skippy

Cyril's picture

Meh.

Meh.

I'm no trader. Not even a stock holder.

But I do programs and all that kind of boring and/or over complicated stuff (i.e., to anyone who hasn't lost one's own sanity decades ago, like some of us have).

So, I'll just say :

looks like someone has nothing better to do than gauging the 1000s CPU's-Rube Goldberg machine that is running up there for traders to play with 24/7.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Someone testing out

Someone testing out weaknesses in the stock exchange, either to cause problems or figuring out how someone else did.

Hey, it beats when the NYSE was run on a unix.

fyi -
http://www.computerworld.com/s/article/9053008/NYSE_places_b...

And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor.

They said activity, not

They said activity, not volume. 4% of the quotes I'm guessing.

So when will the market crash? Romney poll # increase

a lot after that debate. Will Obama bring down the country further, to cause the market to crash before the election, since he hates what the US stands for?

obama

It's obama putting hackers to work to falsely raise the stock market to make it appear that the economy is getting better so he can claim responsibility for improving the economy & get needed votes to win the election

Self promotion from Nanex

in hopes to be acquired by a big trading company or accepted as an authority by the SEC.

If no single trade was executed, the extra traffic did not affect the trading volume.

obviously a test..

an insider-trading express lane, perhaps?

“Travel is fatal to prejudice, bigotry, and narrow-mindedness.” - Mark Twain

how can you count them as trade activity?

how can you count something as a trade if it wasn't an actual trade?

seriously though, are they really counting non trades as trades? wtf is that?

I use Blue Wave, but don't expect one of THEIR silly taglines.

The stock market

seems to have outlived it's usefulness and seems to be dominated by computer stock traitors exploiting businesses.

"We can see with our eyes, hear with our ears and feel with our touch, but we understand with our hearts."

Not the Computer's fault

It's only made possible with unlimited Cash from the federal reserve. Without Billion dollar overnight loans; these things are not feasible; hence another reason for structural imbalances through further misallocation of resources. These are nothing but false signals created by a counterfeiter.