Are HFT Algos Taking Aim At Dominating And Manipulating The Wonderful World Of ETFs Next?

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Mon, 06/13/2011 - 14:09 | 1365332 centerline
centerline's picture

Some of the best scientific minds used today to create incredibly sophisticated work intended to game the system for fast money in order to live like rock stars.  Humanity at it's finest, no?

Mon, 06/13/2011 - 14:16 | 1365365 plocequ1
plocequ1's picture

This is bearish for charts

Mon, 06/13/2011 - 14:28 | 1365405 DoChenRollingBearing
DoChenRollingBearing's picture

It seems to me that this has to be illegal...

How come NO ONE in power at the SEC or elsewhere has said anything about this?

Mon, 06/13/2011 - 14:34 | 1365423 SheepDog-One
SheepDog-One's picture

Because 'its all good'.

Mon, 06/13/2011 - 14:48 | 1365467 Spirit Of Truth
Spirit Of Truth's picture

If this were a just world, ZH would win one of those fat 9-figure gubermint consulting subcontracts and be helping the SEC do it's purported job.  The investigative work done here is mind-boggling.

Tue, 06/14/2011 - 17:40 | 1369085 mkkby
mkkby's picture

I don't get it.  Can someone please explain how this actually changes the NBBO?  I mean someone else was already bidding/asking better prices.  Wouldn't all these quotes be non marketable?  So what if I come in with crazy quotes 1000x per second that are nowhere near marketable.  I thought they said no trades were executed, so unless they actally buy out the price levels (from themselves?), why does this matter?

What am I missing?

Mon, 06/13/2011 - 14:32 | 1365427 sabra1
sabra1's picture

they're all busy staring at weiners pics!

Mon, 06/13/2011 - 15:33 | 1365600 MachoMan
MachoMan's picture

in their defense, they thought it was a woman when they clicked on the link...  of course, at some point you quit getting "fooled"...

Mon, 06/13/2011 - 14:48 | 1365470 Oh regional Indian
Oh regional Indian's picture

DCRB, in the current machine/capital paradigm, tech-fucking your opponent is always allowed. it get's you badges and stripes usually.


Mon, 06/13/2011 - 15:18 | 1365561 LawsofPhysics
LawsofPhysics's picture


Think about it, in the history of the world "tech-fucking" has always been allowed.  Right up until the point where you are eating your competition.  Come on now, just think of all those societies that were slow to develop and apply the use of gunpowder.

Mon, 06/13/2011 - 17:09 | 1365809 Oh regional Indian
Oh regional Indian's picture

In recorded history, I'll grant you that, completely! :-0

Mon, 06/13/2011 - 17:15 | 1365821 Oh regional Indian
Oh regional Indian's picture

In recorded history, I'll grant you that, completely! :-0


Mon, 06/13/2011 - 14:19 | 1365375 bankrupt JPM bu...
bankrupt JPM buy silver's picture

Im starting to document this on SLV and record my desktop platform.

Mon, 06/13/2011 - 14:28 | 1365419 DoChenRollingBearing
DoChenRollingBearing's picture

Nice blog.  Tightly focused.  If you would like a link to mine (I use my real name, and it is NOT focused, so very different) send me a gmail at my name and assure me that you will behave.

Mon, 06/13/2011 - 14:10 | 1365340 Robslob
Robslob's picture


The purpose of the algo is to simulate an "open market" while other AI machines nuke the entire planet and rid themselves of those pesky "carbon" units...

Thus when the alien life forms finally show up to bailout planet earths governments and banking cartels from decades of abuse all they will find is a perfectly functioning market...of machines.



Mon, 06/13/2011 - 14:41 | 1365455 Oh regional Indian
Oh regional Indian's picture

Rob, then perhaps it's time for a butlerian jihad, eh?




Mon, 06/13/2011 - 14:10 | 1365353 painequalschange
painequalschange's picture

Isn't there anything you CAN invest in any more?

Mon, 06/13/2011 - 14:27 | 1365410 10kby2k
10kby2k's picture


Mon, 06/13/2011 - 14:32 | 1365421 SheepDog-One
SheepDog-One's picture

Firearms, ammo, farming implements, food...

Mon, 06/13/2011 - 14:34 | 1365425 DoChenRollingBearing
DoChenRollingBearing's picture

Gold & other PMs, water filtration devices, prescription medicines, first aid kits, barter items (booze)...

Mon, 06/13/2011 - 15:07 | 1365535 Deepskyy
Deepskyy's picture

And play plenty of Fallout 3 during your down time.  I got a feeling we will all be "wastelanders" soon.


Mon, 06/13/2011 - 16:04 | 1365662 Smiley
Smiley's picture

Make sure you program all the landmarks in your Pip Boy 3000 before the area becomes infested with RadScorpions; those bastids hurt like hell.

Mon, 06/13/2011 - 16:14 | 1365669 Smiley
Smiley's picture

I'm considering metal ingots; copper, aluminum, titanium, tin, and nickel.


+1 on the booze, even if you don't drink the stuff.

Vacum sealed cigarettes are big on my list.

Mon, 06/13/2011 - 20:12 | 1366314 delacroix
delacroix's picture


Mon, 06/13/2011 - 17:58 | 1365954 Smiddywesson
Smiddywesson's picture

There is plenty you can invest in during the apocolypse:

Hair gel for those mohawks

Motorcycle accessories

Hockey masks

Leather anything

Fredericks of Hollywood supplies, because there's nothing a man wants more after plying the desert blown highways of the apoclypse, then a mohawk sportin' muscle bleach blonde babe in Frederick's of Hollywood attire.

Dump your gold, Frederick's is the new reserve currency 

Mon, 06/13/2011 - 14:14 | 1365354 AmCockerSpaniel
AmCockerSpaniel's picture

ALL paper (shares) will be destroyed. Only the physical (PM) will be left in the hands of the owners. When the markets crash/ lockup, it's the same as a run on the bank. Know that if you can not sell something, it's the same as it being worthless.

Mon, 06/13/2011 - 14:32 | 1365428 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1515

If you do not have any physical gold, you should buy some.  YES, it will go up and down, but its long term future is very promising.

Gold is the best wealth preserver in town.

Mon, 06/13/2011 - 14:15 | 1365360 Smiley
Smiley's picture

Its a big fat joke and the individual investors are the punchline.

Mon, 06/13/2011 - 14:24 | 1365388 Duuude
Duuude's picture

It's either called...


A Borgprobe

or a




Mon, 06/13/2011 - 14:27 | 1365413 AmCockerSpaniel
AmCockerSpaniel's picture

First it was the equity in your home, now it's the wealth in you stock market paper.

Mon, 06/13/2011 - 14:28 | 1365417 SheepDog-One
SheepDog-One's picture

Those poor pensioners, one day soon theyll all be holding an empty bag.

Mon, 06/13/2011 - 16:13 | 1365686 Smiley
Smiley's picture

And living off cans of dog food...

Mon, 06/13/2011 - 14:12 | 1365361 Wolferl
Wolferl's picture

Is there really someone out there who thinks ETFs are NOT manipulated?

Mon, 06/13/2011 - 14:12 | 1365362 Highrev
Highrev's picture

Could it be that the NatGas "sine wave" was one of these with the buy and sell mistakenly flipped?

Mon, 06/13/2011 - 14:14 | 1365371 Cdad
Cdad's picture

mistakenly flipped?


Mon, 06/13/2011 - 14:15 | 1365363 Franken_Stein
Franken_Stein's picture


The crocodile jaw algo.

The spread spread algo.


Mon, 06/13/2011 - 14:42 | 1365446 totem
totem's picture

This algo is the Doomsday_Machine from Star Trek... and we're all out of Commodore Decker's here on Earth.


Mon, 06/13/2011 - 14:46 | 1365459 The Fonz
The Fonz's picture

The Spread Eagle Algo, just so you know your being fucked.

Mon, 06/13/2011 - 14:17 | 1365368 InconvenientCou...
InconvenientCounterParty's picture

Fairness and capitalism are mutually exclusive. Social Darwinism at its finest.

learn it, live it, love it.

Mon, 06/13/2011 - 14:18 | 1365373 SheepDog-One
SheepDog-One's picture

Algo's partying up a storm!

Mon, 06/13/2011 - 14:31 | 1365418 10kby2k
10kby2k's picture

And LeBron didn't join them.

Mon, 06/13/2011 - 14:15 | 1365374 irishlink
irishlink's picture

If this type of manipulation continues and intensifies ,wall streets days are numbered. Who wants to try to second guess these guys.

Mon, 06/13/2011 - 14:22 | 1365396 King Durian
King Durian's picture

Now it makes sense why the NYSE was willing to sell to the Germans. This HFT infested market will be Germany's problem soon enough. But, Germany outlawed naked short sells, so there might be hope for the NYSE Bourse if the Germans run it.

Mon, 06/13/2011 - 14:23 | 1365387 King Durian
King Durian's picture

I am apprehensive towards the day these HFT algos have a run at the Bitcoin market. The only thing saving the Bitcoin market from this utter manipulation is due to the lengthy time it takes for Bitcoins to change hands. However, I see that changing as more and more solutions are cropping up to cut down the transmission time. For the meantime, however, I would suspect that the Bitcoin economy is HFT free. Of course, I could confirm this opinion by checking the public Bitcoin records to see if there were any abnormal transactions occuring in the market.


I personally think that if this HFT nonsense continues, eventually the average investor is going to catch wind of this, and are going to forego playing in these manipulated markets. It may have already happened, but I think the trend will continue on the longterm unless this nonsense stops. It may even make other stock markets more inviting.. can you see the billboard advertisements in the Swiss Alps yet? Invest in the "NIFTY- HFT and Algo Free since 2011"!

Mon, 06/13/2011 - 14:24 | 1365390 oogs66
oogs66's picture

Dont leave atop loss orders. Don't leave so little equity in your margin account that your broker stops you out.

Mon, 06/13/2011 - 14:28 | 1365407 Highrev
Highrev's picture

Is that a "sine-wave" I see on the /es 5 minute?


Mon, 06/13/2011 - 14:48 | 1365468 Black Forest
Black Forest's picture

No, cosine

Mon, 06/13/2011 - 14:34 | 1365433 Cdad
Cdad's picture

How long before this test attempt to manipulate prices in C-grade ETFs comes to an SPY near you

Why Tyler, it might even be the Algo [crocodile or otherwise] unwisely pumped the market before today's liquidation hour [which is to say the last hour of trading] as fully invested mutual fund geniuses get their marching orders to sell stocks...a phenomena that shall continue until such time as Magic Ben whispers those magic words again.

So everyone, quick turn on your fractal crocodile jaw algo detectors...and call 'em out!

Ah...does anyone remember those mutual fund redemption last hour trading days?  I do...and fondly so.

Mon, 06/13/2011 - 14:38 | 1365435 espirit
espirit's picture

Pull the plug Bitchez, commence Operation Mayhem.

Mon, 06/13/2011 - 15:00 | 1365505 TheTmfreak
TheTmfreak's picture

Is there any reason you aren't already acting upon Operation Mayhem? Everyone has a part. Play yours.

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