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Efficient Markets? August Oil Futures Flash Smash & Crash Into Expiry
August WTI Crude Oil futures expired at 230pm today... a fact that has been known for years... and yet, in the minutes before the 'last trade' settlement, the 'efficient' markets in which traders trade saw August futures flash smash higher by over $1 (running stops to the upside) and then crash to the day's lows (running stops to the downside) before closing modestly lower on the day.
As Nanex shows this was all about the expiration... as only the August contract was affected...
As the machines ran stops top and bottom of the day...
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"unrigged"
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Yes, traders fuck with contracts going into expiry. Welcome to the Street.
Looks like a SAM launch to me, lets go to DEFCON 2.
Must be the Russkies.
Wait! Wait! We're lowering the Defcon level?
stops are asking to be ripped off, I know everyone says use them but they are just like bending over and asking for it.
Look in theory, and several years ago, stop orders made alot of sense. Limit your losses. Very prudent. Unfortunately, in the frenzied computer/algo trading environment we live in the algos 'see' your stops and through elaborate gaming techniques that take nanoseconds to perform-without any real market or fundamental forces having no impact- take those stop losses out , on either side of the book (like they did today at the oil expiry), make money for themselves (without any risk I might add) and you are just another sucker if you use stop loss orders.
Also, in the event of a real meltdown, your offer is going bidless anyway. What's the point of a stop? Get fucked by "normal" volatility and forgo any real protection? Sounds like a win! (And if you can't see it you're on the wrong side of the trade.)
wondering if the 3x/ultra-shorts will be bidless. Thinking May 6 2010.
Wait until Saudis give "hints" that they won't ship oil unless QE is fully unwound.
Let's see what algo could do then.
Saudis gave that "hint" when we tried to pay for oil with paper gold in the early 1970s. The game's been afoot ever since.
Any of you folks read Frank Herbert's 'Dune' series? Well, in that fictitious future they had a Butlerian Jihad where computers and nuclear weapons were banned. Forever, on the point of death.
I think we need our own Butlerian Jihad.
ya thats the ticket! luckily no capatalist would take you seriously....so in order to keep order, you are threatened with death? we already have that, its called religion, just take your pick.
A flaw in the series. "Computers" were necessary to operate ships and weapons. I believe the intent of the author was artificial intelligence vs. just "computers". However, once technological advances are out of Pandora's box there is no way to put them back in. I guess that's why they call it science fiction.
No, you are incorrect. In the award winnng Dune series Guildsmen,space pilots covering vast distances in their ships figured out navigation at warp speed through injesting the 'spice' to 'see' the future; and to compensate for the loss of computers certain people became Mentats-people with computer like minds that advised the leaders. It took years of study for them to become a Mentat.
Where is Duncan Idaho when we need him!!!
The spice must flow.
Hungry pit takes it when it can; there is no future is their mantra.
I would love to know who's contracts were settle where. You know, just for curiosities sake.
Anyone?
Wall Street Vs the World. Wall Street is winning battle after battle, but will they keep gold and oil down while keeping stocks and bonds up forever?
Momma is calling u......BANG BANG THE CLOSE!!!!!!!!!!!!!!!!!!!!
It's a bitch when you have to roll contracts or else. Who is willing to head toward the cliff at high speed the longest.
there's no issue here...
Please Tyler give it a break. You know better. And while you are at it, bring back Martha.
$1 isn't much, but "smart" people were arguing for years that the oil market was so big, it couldn't be manipulated like PMs and FX...
Nothing makes sense anymore.
"unrigged"
Ya