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Equity Market Structure "Minefields" - The Ultimate Survivor's Guide

Tyler Durden's picture




 

Be afraid... be very afraid. This is not your father's - or even your older brother's equity market. As we have discussed for over 5 years and Michael Lewis dragged kicking-and-screaming into the world's eyeballs, there is something very different about the world's capital markets than ever before. ConvergEx's all-encompassing "Traders Guide to Global Equity Markets" is, simply put, everything you wanted to know (and perhaps did not) about the world's stock markets but were afraid to ask. The subtle title they chose to explain the various order types and market structure dynamics - "Trading Minefields" - you can't avoid them unless you know where they are.

 

 

Traders Guide to Global Equity Markets

 

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Sat, 05/17/2014 - 20:43 | 4770349 kaiserhoff
kaiserhoff's picture

Just so.

Why try to hide the infomercial?

Sun, 05/18/2014 - 08:35 | 4771041 Doña K
Doña K's picture

I am staying out of the markets as a principle. Better to have a controlled loss of purchasing power than take additional risk on rigged market.

To counter, use PM's.

Starve the beast. Let the hedge funds eat each other.

Sat, 05/17/2014 - 20:45 | 4770355 BrosephStiglitz
BrosephStiglitz's picture

Awesome info.  Thanks Tyler.  Will study in five weeks when time presents.

Sat, 05/17/2014 - 20:53 | 4770370 Seize Mars
Seize Mars's picture

M'kay. Equity markets.

So I'll put my money on deposit with a firm. They can steal it at will with no chance of being prosecuted. (Corzine).

Well let's hope they don't. Then, maybe my stocks go up, maybe they don't. If my stocks go up, I have to give a third of the profits to the IRS.

If my stocks go down, well, I own the losses.

So, let me get this straight: money disappears, or it doesn't. If it doesn't and the bet works, I give a third to strangers by coercion, if the money isn't stolen and the bet doesn't work, I alone stand to lose.

Tell me again, why would I do this?

Sat, 05/17/2014 - 21:06 | 4770394 BrosephStiglitz
BrosephStiglitz's picture

Because otherwise you will be left behind by the inflationary policies of the Fed?

But in all honesty, I see no reason to participate in the US equities markets at all right now.  If I wanted to have a stranger scam me out of my savings I'd go try to knock coconuts off a stand in a fun fair. 

More interested about the other markets detailed in the document. 

Sun, 05/18/2014 - 00:40 | 4770772 Seize Mars
Seize Mars's picture

Stiglitz

But that's exactly my point. Being left behind by the inflationary policies of the FED is not remedied by taking the above mentioned "risks."

The only mitigating strategy is operational, not "market driven." In other words, get into other assets or income streams that have a chance of keeping pace but also are not subject to mark-to-market accounting and, if possible, having minimal counterparty risk.

 

Sun, 05/18/2014 - 02:04 | 4770851 BrosephStiglitz
BrosephStiglitz's picture

Oh yeah.  No question about it.  Removal of mark-to-market , the rise of channel stuffing, probable use of SPVs to hide liabilities off balance sheets and so on, plus buybacks on margin.  They are pulling all the stops right now.   Looks like a really, really bad time to enter the market.

I sold my US equities in Dec 2013 and shifted some of the principal into physical silver.  I might be wrong, but the potential downside risk is too big for  the US equities markets.  In fact, I'd rather stay clear of dollar denominated trades altogether.  Even if they are slated to be the "cleanest dirty shirt".  I'll believe it when I see it.

Sun, 05/18/2014 - 06:26 | 4770973 new game
new game's picture

two words real estate. take out the peaks and valleys and what do you get? a nice return, underlying asset appreciates(inflation and value of land vs depreciation of structure) and an assest most people NEED. BEATS EVERYTHING OUT THERE HANDS DOWN...

Sun, 05/18/2014 - 07:31 | 4771001 BrosephStiglitz
BrosephStiglitz's picture

Cool story bro.  I'm 25 right now.. So the only way I will be afford real estate any time this century is if I sell a kidney, liver, etc. on the black market.  OR make best friends with a Rothschild.  OR rent my ass out to a Saudi oil Sheik.

Rental property might do well.  I'm more of a fan of arable land long-run than a fan of artificially created wealth bubbles.  Low and medium end real-estate has performed well to date in the US/UK/Western Europe up until '06 because of mortgages artificially inflating demand at increasingly low interest rates.  Post '06 some areas have managed to keep real estate growing through cash purchase.  Either from the very wealthy at home, or from the very wealthy abroad.

I do agree that the real-estate racket will continue to perform at the expense of the citizenry.  Once the Chinese stop buying we will be transmitting electromagnetic messages through the galaxy and inviting extra-terrestrials to partake in the real-estate boom. 

Sat, 05/17/2014 - 21:12 | 4770407 kaiserhoff
kaiserhoff's picture

With that attitude, young man, you may be missing out on some wunnerful investment opportunities in Afghanistan..., but prolly not.

Sat, 05/17/2014 - 23:47 | 4770689 WhackoWarner
WhackoWarner's picture

I know I'm an idiot.  The more I know,

The more I know I do not know.

 

But to ask the ultimate idiot question.  And this is incredibly stupid.  Who is honest anymore.  It is running down the hills like a lava flow.  Even small comapnies are frigging around with client accounts.

Stupidest question of all?  Who treats their neighbours as the would themsleves be treated?  ( not religious; just a simple question of DECENCY).

I am in the wrong business.  Call human life, these days it is a losing prop.

Sun, 05/18/2014 - 00:26 | 4770753 Seize Mars
Seize Mars's picture

No that's not a stupid question - it's a central question.

The important thing to realize is that none of these people is incentivized to be decent. None.

That means do business with someone at your risk. Paper money? Are you fucking kidding me? Yeah, right. It's abstraction on top of abstraction. Paper money created by a counterparty promise, placed on deposit where it is tracked by zeros and ones on a computer. So you can "trade" it for other book-entry "assets."

M'kay. No thanks.

Sun, 05/18/2014 - 06:43 | 4770984 barroter
barroter's picture

It's not stupid at all.  If you have assets, they want them.  They'll do or say anything to you in order to get them. From a simple car repair to a financial advisor. I swear 98% of them will lie to your face.  Ever watch two businessmen deal with one another? They jockey for position to be the one who will screw the other the most.

Yes, it seems everyone has aped this behavior now.

Sat, 05/17/2014 - 21:07 | 4770396 Vincent Vega
Vincent Vega's picture

Aaaaand it's gone!

Sat, 05/17/2014 - 21:14 | 4770410 Atomizer
Atomizer's picture

Use the auto link to understand.

http://www.kitco.com/charts/liveplatinum.html

Sat, 05/17/2014 - 21:18 | 4770420 BrosephStiglitz
BrosephStiglitz's picture

Why platinum?  Am I missing something here?  Silver looks much more attractive, aside from the Legion of the Damned suppressing it.

Sat, 05/17/2014 - 21:26 | 4770427 Atomizer
Atomizer's picture

you'll figure out, see below.

Sat, 05/17/2014 - 21:25 | 4770426 Atomizer
Sat, 05/17/2014 - 21:41 | 4770453 BrosephStiglitz
BrosephStiglitz's picture

Sorry.  I must be blind, unless you are just trolling?  Platinum (as far as I am aware) is used predominantly in catalytic converters, and looks set to tumble in the future.

Sat, 05/17/2014 - 22:00 | 4770480 disabledvet
disabledvet's picture

Yep...perrty much.

While we're on the subject of "information exchanges" as a free trader I think it's high time we opened up that can of worms and started regulating them.

I mean the whole FISA "search warrantable" thing strikes me as rather opaque. As is well known "you can indict a ham sandwich." So the question isn't "what we know" but to me "what we don't."

Sat, 05/17/2014 - 21:49 | 4770463 q99x2
q99x2's picture

You just BTFD in the DOW and don't you worry about no freakin minefields.

Sun, 05/18/2014 - 13:19 | 4771494 ebworthen
ebworthen's picture

Is it Monday and are the markets down?  Buy, for tomorrow is a Tuesday.

Sun, 05/18/2014 - 18:16 | 4771981 medium giraffe
medium giraffe's picture

And we btfd friday afternoon. k... I forget, what's Thursday?

Sun, 05/18/2014 - 13:57 | 4771556 AdvancingTime
AdvancingTime's picture

I have no interest in following Mr. Know-it-all up a hill directly into cannon fire. To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong. An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position.

For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. The bottom-line is that the higher the market goes the more vulnerable it becomes to a major collapse and sudden downward move. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/07/markets-more-lies-and-munipulatio...

Do NOT follow this link or you will be banned from the site!