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Another Day, Another Flash Crash
It has been about a week since we have had a flash crash in our broken markets, and we were getting a little antsy. Then Nucor showed up and traded at $0.01. At 11:52:21 something broke, and as the QR chart below shows, it was basically precisely the same algo malfunction that either goes and hits all bids all the way to zero, or some HFT decided to shut down, and wipe out the entire bidside orderbook. The stock which had been trading at $39.58 literally milliseconds earlier, saw a SkyNet T-1 unit go berserk and take out the bids at $37.22, and $35.77 in sequential fashion, with the next trade being at at the residual stub quote of $0.01. Of course, circuit breakers were triggered, but not before even more irreversible damage to investor confidence was suffered. And those idiots 'upstairs' still wonder why tomorrow we will report another massive outflow from mutual funds.
There is a pattern emerging: every week we are seeing a flash crash in more and more prominent stocks. These are getting more and more frequent. And instead of fixing the underlying cause, the SEC continues to fret with reactive damage control, and DKing trades of those who are brave enough to step in and take advantage of broken algos. How long will this kindof bullshit travesty continue?
More from Dow Jones:
The trade, which appears to have taken place on a stock platform owned by CBOE Holdings Inc . (CBOE), set off a single-stock "circuit breaker" as exchanges this week expand the trading halts to all stocks in the Russell 1000 index, alongside some exchange-traded funds.
A spokeswoman for CBOE said Tuesday that the trades that triggered the circuit breaker were canceled. The CBOE Stock Exchange, the market where the trade took place, was looking into the issue, she said.
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circuit breakers written in ... python?
(sorry, couldn't help it... :^)
+100 - Well done!
No, I'm going to guess COBOL. Someone over at Fujitsu is laughing their butt off right now.
I'm betting FORTRAN...
I have a math professor who still uses it.. swears by it for certain applications...
Please everyone keep moving ...
HFT Computer says "All yours stocks are belong to us."
Collapsing confidence in freefalling fundamentals and HFT cause another flash crash, but mostly collapsing confidence in freefalling fundamentals.
Dont reverse the trades and the problem will get fixed. Fcuk Jim Simons.
Exactly. The whole DK thing is bullshit. If the computer fucks you, so be it.
My penny bids and thousand offers are placed in good faith on a GTC basis. Dont like those prices? Dont hit em!
Hear, hear.
Circuit breakers should not be necessary.
The Casino-wheel spins, your penny bet comes up than the pize should be yours!
WTF is this deal with circuit breakers anyway.....Ermmm, in hindsight we feel you acquired the stock too cheap so we declare it null and void.
Fcuk, they are sooooo afraid of price discovery that they have to annul any bet that comes close to reality.
LMAO
Agreed, if their computers agree to sell to you for 1 penny then that is THEIR problem. Only way to get them to stop/fix things is to make them feel the pain of being on the wrong side of the trade.
So my loose change dish should be able to buy 178 shares of Nucor?
Or 178 shares of Nucor is worth about as much as my loose change dish?
Yes.
hey turd,
This is the other half of what Trillium (recently fined by FINRA) does for a living. Wait for these "sitches" to occur, plow into the bad algo order for relatively good size, hope there's no news, and that you get prices ahead of the break points. Make good money doing it too.
Remind me to never again put a trailing stop on a stock.
Wait. Scratch that. Remind me to never again TRADE a stock.
I think I'll join the black market I guess. At least there's some honesty there.
+++ i don't know about "honesty", but at least you know what you are really dealing with.
"It's gettin' so a businessman can't expect no return from a fixed fight. Now, if you can't trust a fix, what can you trust? For a good return, you gotta go bettin' on chance - and then you're back with anarchy, right back in the jungle."
-- Johnny Caspar, Miller's Crossing
more +++s
if you can't count on the criminals, who can you count on?
this is just messed up.
i'm gonna put all my chips on gravity.
Gravity is also curvilinear. Face it, you're screwed.
Better the devil you know..
You're gonna have to be flexible my friend. Sooner, rather than later you'll be paying 10 smokes for a pound of flour. Better get used to the system now.
Only fair that we all can purchase some at a reduced price.
Or at least have your waaaaaaaaaayyy-out-of-the-money put options honored.
Assuming the seller was an HFT, they should make the transactions stand. Retail sell stop - not so much...
The value of stocks is now as nebulous and absurd as the dollar.
At least a stock has some bricks and mortar backing it. The dollar has hot air and a military that can't (won't) find a bearded dude in a cave.
And let a Retail Investor keep the cash? GASP. I will type all 500 limit orders at .01 for all the S&P if that were even remotely possible.
I only wonder why some Python scripting egg head has not written a HFT program to kick in and buy every stock in the company at .01 when flash crashes occur. Quote stuffing and front running?; mere childsplay. Just wait for 2nd generation HFT programs to emerge.
all joking aside, put in a lot of limit orders for stocks 55-60% below current price.
they already told you anything more than 60% will be cancelled. if you had an order in for NUE at $17, that would have been filled and you'd already be up $22/share.
In Vegas at the blackjack table if the dealer misdeals, everyone at the table gets new cards.
Right, so if the dealer (CBOE) screws up the orders, a mulligan seems reasonable.
Blackjack might not be the best metaphor since you don't play against each other, but if you were and a fellow player told the dealer to hit him a dozen times per hand, he shouldn't get to undo that.
Stop rewarding incompetence and it becomes a self-correcting problem. If your computer places a million bucks in bad trades in 3 seconds, you're either going to have a very good incentive not to let it happen again, or you're going to go under. Either way problem solved.
What the hell - I'd even be willing to double your 1 cent bid. ;)
Careful, some of those stocks are not worth $.01! (AIG for one).
> #581398
!! Tnx for chuckle/reality..
In this messed up world..
I'll do a 3 cent bid.. for the children, as the unionized teachers say when they strike..
Historically, computer code was highly efficient since computer hardware was so expensive. Recently things tilted the other way with faster hardware making up for less efficient software code. It seems to me HFT needs to roll up their sleeves and re-examine their code efficiency. As HFT places phony bids/sells to move price, they are suppose to remove the bids/sells before getting filled. Looks like a glitch in a loop somewhere caused the orders not to be pulled fast enough. Just like the space race proved to be good for moms everywhere with the invention of Tang, HFT efficiency technology will spill over to Facebook, making social networking all the more enjoyable.
I can say this because I am not in the market.
"making social networking all the more enjoyable"
that made me laugh-out-loud, but i'm not sure if it was meant to...
cheers
The python strikes again
Is it just me being old fashioned, or is the notion of confidence between different sets of computer code simply meaningless?
Amazing no word in the mass media of this.
it is the bum rush and cancel routine....they jam the funk out of a stock and cancel all bids...it drops like a hot rock....
Bottom line: the markets are "use to" the liquidity these stoopid bastards bring each day to the casino. But, when they fuck up or dont show on top of the games they play, it becomes very evident the damage these re-treads do to the market.
Great Post TD & Crew - thank you for your research - it provides an insight which is unrivaled ANYWHERE!
come on - get with the important stuff, like lady gaga video ring tones or burnetts new cliche - double dip delusion;
cnbc - where its at
I love how when we're at the bottom of the range all the crooked banks and CNBC are screaming about armegeddon, Europe, etc. (scaring everyone into going short and buying puts.) And now when we're at the top of the range those same sources are making a bunch of noise about QE2 just around the bend... trying to convince everyone they need to buy or they'll be left behind. Such a racket.
I have seen the CNBS headlines of the future. "The Standard and Poors Index closing up for ninety nine of one hundred trading sessions."
Just another fun day in "Barter Town..."
This is Thunderdome. Death is listening!
Stocks and T1 terminals, both barbarous relics....
... but the real "barbarous relics" are running nicely !!
Oh Nice, we can wipe out someone's retirement in 3 secs if we have just the right code weenie jump right into action.
get your weenies while they're hot!!!
privatize the gains, socialize the losses. when the computer programs have bugs, no worry, exchange will bust the trade.
to me, poorly written programs are part of the risk of trading. They should eat the losses - that's what capitalism "should" be
Meanwhile, contrary to the "strong rebound" bantered about on CNBC, housing continues its not-so-flash-crash but rather a very well organized one:
"Southland home sales fell last month to the lowest level for an August in three years and the second-lowest in 18, the result of a worrisome job market and a lost sense of urgency among home shoppers. ... [sales were] down 2.1 percent from 18,946 sales in July, and down 13.8 percent from 21,502 sales in August 2009."
This Managed Market brought to you by the fine makers of Python Software!
Now...a word from our sponsors...The SEC...
The purchase price is still to high.
Someone needs to learn how to wrangle their Python a little more discretely.
Flash crash? Bloomberg.com looks as green as a fucking Christmas tree. This bad news is bullshit. You won Bernanke.
I don't think TPTB give a rat's ass whether the man on the street is in the market. Why would they care about our "confidence" level. This is all about their gain/survival/whatever.
If we want anything above a subsistence level of living, we're on our own.
Only 1 thing left to do...buy stocks and bend over...only then will Ben cu...........
Well just ask anyone they parade across the tv, you are just not in the right stocks, pick this one and you will be okay.
I literally just got off the phone with my best friend, he just left work and asked me where the market is at. He is calling his 401 provider and moving his substantial amount into fixed income today, he has had enough.
Now if I could just get my online banking to come back up, hello Chase????
I feel like the action today is a stock "death-rattle" where you slober, shit and piss all over yourself while doped up....wait...that's me every weekend...shit!
Ah yes, the pen or keyboard is mightier than the sword. And the dim whits fail to see the real threats to our country.
This is the other half of what Trillium (recently fined by FINRA) does for a living. Wait for these "sitches" to occur, plow into the bad algo order for relatively good size, hope there's no news, and that you get prices ahead of the break points.
Jesus, this is getting grim. Its not as if it was already cheep!
That was likely a bad print - these things happen all the time and happened before there was python! Does not have to be HFT related at all.
How about the close on the stock? Pounded it into the close...
National Security at risk. If Al Quaeda could break into the HFT Computers they would not need planes to take the Country down this time.
If the Market went to Dow 500 no one would have any Money or Margin power to buy it back up. Perfect way to attack the US. They could take down the entire US Capatalist system in a matter of minutes.
Without people controling the Market the Market controls the People.
If I withdraw a big chunk of my bank account (not difficult these days), and spend it all on hookers and blow in ten minutes, what do I have to do to get my own personal circuit breaker to cancel those purchases and put the money back in my account?
Count on me! I want a circuit breaker in my life!
kblb
...
Exactly.
It cannot be overstated enough that this problem (which should be solved with jail time for the manipulators) could be mostly solved by simply applying the rules of the marketplace as everyone understands them (if you don't like my 1 cent bid on BP then don't sell to me at that price).
The fact that this is not done - that it is *never* done - has a great deal of diagnostic value. It's very interesting to think about what motivates a regulator to go out of their way to protect the very people they are employed to be punishing criminally.
Buy and hold bitchez, dont care about HFT, they provide me liquidity and make money off market timing fools
I found lots of interesting information here. I love zerohedge.
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