Wall Street 'speed traders' were a secret???? Bullshit!

[Are_grits_groceries]

Stock Traders Find Speed Pays, in Milliseconds

***July 23, 2009***

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices.

It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets.

Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk.

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer.
<snip>
http://www.nytimes.com/2009/07/24/business/24trading.html

Inquiry Stokes Unease on High-Speed Trading
Its superfast, supersecret oil trading software was called the Hammer. And if the Commodity Futures Trading Commission is right, the name fit well with an intricate scheme that allowed commodity traders in Chicago working for Optiver, a little-known company based in Amsterdam, to put their orders first in line and subtly manipulate the price of oil to the company’s advantage, The New York Times’s Landon Thomas Jr. wrote.

Transcripts and taped conversations of actions that took place in *** 2007***, included in the commission’s case, reveal the secretive workings of high-frequency trading, a fast-growing Wall Street business that is suddenly drawing scrutiny in Washington. Critics say this high-speed form of computerized trading, which is used in a wide range of financial markets, enables its practitioners to profit at other investors’ expense.
<snip>
http://dealbook.blogs.nytimes.com/2009/09/04/inquiry-stokes-unease-over-trading-firms-that-shape-markets/

It's been going on forever. It probably gets worse as computers speed up. They just want to make it seem that the 1000 point drop was due to an unknown factor. Pffffffttttttttttttttttt.

[marmar]

1. Wall Street, always in search of the latest scam.......

This is the detritus that our business schools are producing.

[mopinko]

2. this was blamed for the orange county bankruptcy during raygun years

it is nothing new. at all.
however, these things are monitored with the same high speed. front running and other market manipulations are usually immediately seen and alerted on. the audit trail is dense.

[whyverne]

3. Might as well be a secret. Most people have no idea.

I blamed the market drop on the quants and few knew what the hell I was talking about. I tried to do a google search a few months ago on how many trades were high frequency computer generated, and didn't have much luck. I did find one company that I never heard of doing 10 million per day. I've heard estimates on computer trading ranging from 35% to 70% of daily volume. I don't know if anybody knows.

It's the rise of the machines.