Market action, Fat fingers etc.... Vanity...

me again | 5 07 20010 | me

Posted on Saturday, May 08, 2010 9:08:42 AM by Zeneta

Fat finger BS !!!

It's a simple function of market mechanics.

1. If there are no willing buyers at a given time the bid is 0. This has always been the case.

2. If the market declines (when I say market, it's the market for individual securities) to a level that has been identified as my exit, my stop loss, the number that says get me out NOW. My stop orders (sell orders are triggered).

3. There is NO SUCH THING as a MARKET order when you use a Direct Access platform. They built algo's that mimic market orders. The (automated market orders are actually IOC, immediate or cancel, orders) They will hit the best bid if your a seller with a selectnet prefrence and if your filled BUT still have more shares to sell it will hit the next best bid. A lot of individuals are now trading on direct access platforms and have no idea what they are doing.
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Fat finger BS !!!

It's a simple function of market mechanics.

1. If there are no willing buyers at a given time the bid is 0. This has always been the case.

2. If the market declines (when I say market, it's the market for individual securities) to a level that has been identified as my exit, my stop loss, the number that says get me out NOW. My stop orders (sell orders are triggered).

3. There is NO SUCH THING as a MARKET order when you use a Direct Access platform. They built algo's that mimic market orders. The (automated market orders are actually IOC, immediate or cancel, orders) They will hit the best bid if your a seller with a selectnet prefrence and if your filled BUT still have more shares to sell it will hit the next best bid. A lot of individuals are now trading on direct access platforms and have no idea what they are doing.

4. All it takes is one guy with a few (10,000 shares or less) to get the ball rolling. These are STUPID orders but there is no one to say so and stop it.

5. Once a level (price point) has been broken it will trigger these STUPID orders. I used to make a lot of money off these guys.

6. If you recognised a Stupid order that was willing to sell at ANY price, What price would you be willing to buy at ? How about $1.00 or less on a $40.00 stock ? I would buy that all day, if I could. I once bot 3000 share of GE at $3.00 a share when it was trading at $53.00 (clearly an error, and the trade was busted)

7. There was a vacuum that was a perfect storm of events that can happen anytime and will happen again. It happened to DNDN about a year or so ago. The stock droppped from about 24 to 7 in less than 3 minutes. It was one big seller that had no clue how the system works beyond his keyboard. I looked at all the trades for ACN, a stock that went from 38 to .01 (whatever), it was no more than 10,000 shares that triggered the selloff. The best offer, when it traded at a buck was $ 33.00. It was a seller on auto pilot without safeguards or a clue of the way this maket works.

8. SELL NOW !!!!

Are you sure ?

Yes

But,,,,,,,,,,,,,At this price ?,,,,,,,,,,,,,

The computer says yes, at any price.

It was kinda funny that as this was happening you could see that traders saw the stupidity, started to put in bids at sub $10.00 levels not knowing how many shares this bozo had, just hoping to catch a few shares.

I've been doing this for over 20 years. There are a lot of folks that have no clue how the market works.

I've seen "fat finger" errors, and this was not one.

This is the result of technology and effiency that drive all aspects of business.

It's the wild wild west again !!!!

Time to make some money !!!!!

Sorry, but I have no patience for idiots that think they know what they are doing.

BTW, this same thing happened in the 90's to the upside.

Order types:

Market

Limit

Stop market

Stop limit

Limit AON

Market "not held" (love this one)

Fill or Kill (generally stupid)

IOC (immediate or cancel)

MOO (market on open)

MOC (market on close) (because they have too) this is easy cash.

These are your basic order types. There are variations and combinations that are used for various reasons.

At the end of the the day, you need to know what your doing and WHERE you are playing. This is the most competitive arena you can engage.

Be Safe
1 posted on Saturday, May 08, 2010 9:08:42 AM by Zeneta
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To: Zeneta

Can Someone Explain The HUGE Volume Spike In Accenture An Hour Before It Hit $.01?

http://www.businessinsider.com/check-out-this-huge-volume-spike-in-accentures-stock-a-full-hour-beofre-the-infamous-1-cent-bid-2010-5#ixzz0nIHG0kTd

2 posted on Saturday, May 08, 2010 9:15:26 AM by The Magical Mischief Tour
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To: Zeneta

When the story first came up that it was someone clicked B (billions) instead of M (millions) my BS meter went through the roof. Orders aren’t written out like that (ie, you don’t order 1.5M shares, you order 1,500,000 shares).

The next explanation was that it was a decimal error. My BS meter is also going off with that because it would only change the amount by a factor of 100 which means there was still some pretty heavy trading on the downside. Also, the orders for the trade for the ‘billion’ orders would have had to have an account that could have supported that large of a trade. If it was PG, that means the minimum account value just to cover the trade would have been over $60 Billion. Not too many institutions have that much free capital available to close that order.

3 posted on Saturday, May 08, 2010 9:16:34 AM by mnehring
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To: Zeneta
I was testing a desktop trading system pushing 10 trades from an Excel file. The system was supposed to be connected to an off-line test exchange but the developer routed it by mistake to a real one.

Like I said these were test trades not market reality based ones and they got confirmed. The positions posted cost the trading company about 230,000.
4 posted on Saturday, May 08, 2010 9:16:39 AM by AU72
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To: Zeneta

Wow. Thank you for a very informative post!

5 posted on Saturday, May 08, 2010 9:17:13 AM by NCjim ("You can't pick up a turd by the clean end", Bob Lonsberry on Obamacare)
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To: The Magical Mischief Tour

nice

good eye

I suspect it was an error but would need to check it out. I’ll see if I can get me platform up.

very cool

6 posted on Saturday, May 08, 2010 9:18:46 AM by Zeneta (Why are so many people searching for something that has already found us ?)
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To: The Magical Mischief Tour
WOW!

It is almost like someone was expecting a drop and placing orders on it before it happened, but it may have gone well below what they expected. Maybe hackers (China?) trying to manipulate the prices and it got out of control?
7 posted on Saturday, May 08, 2010 9:19:30 AM by mnehring
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To: Zeneta

Did you see this:

Feds trace flash crash to Chicago:

http://www.politico.com/news/stories/0510/36946.html

8 posted on Saturday, May 08, 2010 9:21:19 AM by Revel
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To: mnehring
Million or a Billion

It's all just numbers on a screen.

Most if not all Institutions have safeguards for this.

Decimal point errors happen all the time, But the RISK is also checked by “most institutions”.

There are some very large “retail” accounts that don't know what they are doing.
9 posted on Saturday, May 08, 2010 9:24:26 AM by Zeneta (Why are so many people searching for something that has already found us ?)
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To: AU72

That’s a cluster F*********

10 posted on Saturday, May 08, 2010 9:25:34 AM by Zeneta (Why are so many people searching for something that has already found us ?)
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To: mnehring

No REAL money was made here.

Aside from the busted trades, there where only a few thousand shares traded at those lows.

11 posted on Saturday, May 08, 2010 9:27:38 AM by Zeneta (Why are so many people searching for something that has already found us ?)
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To: Revel

OK,

Flash guys are seeking liquidity, they don’t hit bids that aren’t real.

HFT (High frequency Trading) these guys are looking to capture small increments, one or two PENNIES, They make there money from REBATES for providing liquidity.

12 posted on Saturday, May 08, 2010 9:34:03 AM by Zeneta (Why are so many people searching for something that has already found us ?)
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To: The Magical Mischief Tour
Can Someone Explain The HUGE Volume Spike In Accenture An Hour Before It Hit $.01?

It may have well been a real trade, but it is still a trade none the less, a buyer and a seller that BOTH AGREED too.
13 posted on Saturday, May 08, 2010 9:54:21 AM by Zeneta (Why are so many people searching for something that has already found us ?)