Whack-A-Mole Algo Is Back

Tyler Durden's picture

It feels like it was just yesterday that the Whack-A-Mole algo in Earthlink was wreaking NBBO havoc (completely unsupervised mind you: it is not like anyone would expect the SEC to move its little finger to address this glaring Reg NMS 'outlier'). Wait, it was... Which probably explains why the very same algo is back in the very same name, at the very same time.

From Nanex:

Ladies and Gentlemen, who wants to play Whac-A-Mole today?

Yesterday (Aug 2'nd, 2011) we reported on the wild "Whac-A-Mole" algorithm. It appears it was not an isolated event as whac-a-mole was again spotted running in ELNK right after regular trading closed at 16:00.

ELNK - EARTHLINK

Price Only:

Price and Size:

Scatter plot of trades only (Price and Size):

Zoom in of price and size activity:

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Rodent Freikorps's picture

Someone really needs to get this guy a couch in his office. Secretary must be bucking for a raise.

zorba THE GREEK's picture

The last chart looks like Atari Space Invaders game.

Hobbleknee's picture

The color palette is clearly Centipede.

floydian slip's picture

Its so obvious.

The top one spells out MOWTOWN

Detroit bitches!

slaughterer's picture

Here are the AH fills for Earthlink (I  not think anybody is getting rich from this):

 
16:00  $ 7.88 100 16:00  $ 7.89 500 16:00  $ 7.89 200 16:00  $ 7.89 700 16:00  $ 7.89 1,400 16:00  $ 7.89 1,400 16:00  $ 7.89 300 16:00  $ 7.88 200 16:00  $ 7.88 200 16:00  $ 8.03 200 16:00  $ 8.03 200 16:00  $ 8.03 200 16:00  $ 8.03 400 16:00  $ 8.03 200 16:00  $ 8.03 600 16:00  $ 8.03 600 16:00  $ 8.04 100 16:00  $ 8.05 1,000 16:00  $ 8.04 600 16:00  $ 8.04 600 16:00  $ 8.04 200 16:00  $ 8.04 400 16:00  $ 8.04 1,400 16:00  $ 8.04 1,000 16:00  $ 8.04 100 16:00  $ 8.04 1,400 16:00  $ 8.04 100 16:00  $ 7.99 1,000 16:00  $ 7.98 1,100

Read more: http://www.nasdaq.com/aspxcontent/ExtendedTradingTrades.aspx?selected=ELNK&mkttype=after#ixzz1U0KBrvQb

 

Raynja's picture

7.88 to 8.05 is a 2.157% move in price in less than a minute.

some leverage and knowledge of where the price is headed and i think someone is getting extremely rich.

slaughterer's picture

OK, so everybody on ZH set limit orders AH on Earthlink tomorrow, +/- 2% from the closing price.  + = sell, - = buy.  And lets see how much $$$ our whack-a-mole HFT whacks over to us.   C'mon, put this website to use!

Stares straight ahead's picture

That wouldn't work.  The algo would harvest the profits as it sold the -2%limit holders to the +2% limit holders.  If we did what you suggest, we would be setting up more dominoes for the W-A-M algo to knock down.

Now, go give your gregarious secretary a raise, get a couch placed in your office, and leave the sheeple alone.  ; )

karzai_luver's picture

that's gonna leave a mark....OUCH!!!!!!!!!

 

Stares straight ahead's picture

Actually, i apologize. I misunderstood his point and spoke too quickly. It might be a good idea and i was hoping to see some more ideas on how one might profit during these "raids."

However, I suspect the algo would be flooding the market with so much noise, that the theoretical ZH limit placers would not get their trades executed.  I have seen where a limit placed (in a scottrade account), should have been executed during a flash crash, but it didn't execute. I supposed this to be the reason.  My slow-ass scottrade account was not even in the market place while this algo was zipping it up.

One would have to place a lot of trades for it to result in a good profit.  What if only one side of the trades got activated? 

Would fees for the trade eat up the pennies profit?

 

 

 

 

Tunga's picture

Ha Ha! Good one Stares straight...

 You assume that there are actually humans running this website! Tunga not only naieve human on this planet!

 

Stares straight ahead's picture

Whispers,  "....reptilians??"

johngaltier's picture

Seriously doubt they are making money on the actual price movement. Too risky. The algo does not have the security cornered. Any other trader is free to come in and role some marbles in front of Citadel, DE Shaw, Renaissance, whoever the quant is thats picking up the pennies. Easy way to get hit by a steamroller.

Left Right Wrong's picture

Sorry to hijack, but can someone please explain this in layman's terms?  I get it that there is some awesome technicolor manipulation going on, but I'd appreciate someone with knowledge walking me through the process of flooding fake bids/asks at different prices, what it means, and how it equals profit.

mason5566's picture

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papaswamp's picture

Whack-a-bitchez!

Jambo Mambo Bill's picture

looks complicated...

Doubleguns's picture

Remember its hump day. The market was going to screw someone, guess it was earth link.

fishface's picture

someone needs to hack into this computer and put everything for sale for a penny

 

 

Zero Govt's picture

Very colourful ...it's like a technicolour yawn (someone puked on the screen?) ...i'm sure private investors will be flooding back to the markets real soon

...meanwhile gather round for the big one coming in 3... 2... 1...

lovesmoney's picture

this is insane. 

Zero Govt's picture

no it's a lack of inner consciousness ...a brain dead computer ...think pre-designed intelligence, like a toilet flush mechanism, it doesn't question when its flushed

tekhneek's picture

I'd be pretty good at making money too if I bought what I sold and sold what I bought using an algorithm for bid/ask placement and monetization or... the actual transaction.

Can someone honestly explain this?

Is it like 1 account takes a 1% loss while another highly leveraged account makes a 3% gain and then puts 1% of that back into the account and starts all over... that kinda thing? I find this awesomely confusing.

(Maybe I'm just ignorant... probably/actually/yeah/tradition ignorant.)

johngaltier's picture

There are plenty of synthetic instruments out there that can give exposure to a name with no ownership required, not the least of which is a total return swap.

Probably not the case here though. whoever the trader was probably made some money on a volatility bet. Make price swings so wild, you are the only one brave enough to trade. Jiggle the volatility until desired level is achieved and leave the price more or less where you found it. I think the key would be to have the price swings stay in a narrow band as not to trigger any limit orders or short coverings. Manufactured volatility without a loss on your account. Pretty sweet.

Not a professional so take with a grain of salt. Or a spoon full of sugar, whichever you prefer.

 

gorillaonyourback's picture

best way to beat these hft algos is go straight to the company and buy it there, by pass wall street

gorillaonyourback's picture

I really believe over there next few years if the dow is still around more and more people will demand buying stock from the company itself

Johnny Lawrence's picture

OT: The ruthless attacks on the Tea Party are insane.  MSNBC just had on some pyschologist who specializes in addiction, and asked him if the Tea Party basically suffers from mental illness.

God forbid we do something to break up this ridiculous 2-party, Wall-Street assbanging political system.

JW n FL's picture
The billionaire Koch brothers: Tea Party puppetmasters? The New Yorker makes a case that a pair of wealthy brothers is the force behind the Tea Party movement. Here, 5 key assertions from a new article

http://theweek.com/article/index/206405/the-billionaire-koch-brothers-tea-party-puppetmasters

Rodent Freikorps's picture

So Soros and the Chinese have some competition?

How horrific.

Y'all trying to Alinsky the Koch brothers does not make me dislike them. I makes me think they are f'king heros.

muckraker's picture

Why would you "junk"/red arrow this post? One would think that ZHers of all people would be willing to follow corporate money, which includes the financing of the TP by the Koch Brothers. Americans for Prosperity or FreedomWorks ring any bells for anyone? Or are you naive enough to believe that the TP is really a grassroots movement? There are chumps on both sides of the political spectrum. Please keep this in mind at all times.

karzai_luver's picture

why, because either the dude that posted the junked mess above is clueless or a party shill.

 

junk well deserved.

 

gwar5's picture

.

 

It shows you who TPTB fear most -- Constitutional rule of law, fiscal conservatives -- those rebels!

The MSM is going down with Obama, they just can't help themselves. They become more pravda, and Soviet-like, everyday. It's no accident they're calling little old lady TPs radicals, they're trying business branding techniques to inject the meme. But the MSM also has a huge vested interest because they want $60 billion/yr taxpayer subsidies to spout the party line on the all major channels and NYTs, and can't do it if Valdimort isn't reelected and makes good.

The old Soviet tactic was also to discredit the opposition in the USSR by declaring them "mentally ill" or insufficient in some way. Anyone who didn't agree with marxist ideology was, by definition, a mentally ill apostate to marxist "truth". They sent people to those "re-education camps" to get their minds straight with immersion in marxist ideology until they capitulated.  Gulags were the next level threat if your actions could be deemed criminal or an outright threat to the status quo. China did the same thing. Our reeducation camps are the MSM with marxist product placements everywhere.  

Alexandr Solzhenitsyn: "The worst part about living under communism was living a lie".

 

A Cuban-America women describes what it was like as a little girl in Castro's Cuba:

"I remember I was 5 years old in the first grade, and everyday the teacher would tell us close our eyes and put our heads down on the desk.

Then she would tell us to pray like that to God for a piece of candy. Then she would tell us to open our eyes and look up. There would be no candy.

Then she would tell us to close our eyes and put our heads back down and pray to Fidel Castro for a piece of candy.

When she would finally tell us to open our eyes and look up, there would be a piece of candy on our desks.

That is what is what like to be a little girl in Fidel's Cuba."

 

Sarah Palin actually had a good one: "If the Tea Party was really a terrorist organization Obama would want to pal around with them."

 

 

Bastiat's picture

In either case it was bullshit, wasn't it?

JW n FL's picture

It is hard to do Gods Work and Never have a losing trading day!

bob_dabolina's picture

Show me an algo that can lick my taint and you have an investor.

buzzsaw99's picture

it takes two to tango or maybe it is an[sic] masturbatory algo? it's not like the sec cares.

bbq on whitehouse lawn's picture

One should remember that computers only do what their

swiches tell them to.

Sooner or later speed will no longer work and foward or push Algos will come into being. Then push will no longer work, then you will need interpretive algos  must come online; then multii-linked, then quantive phased, then muti-quantium linked forced pushed algos.

Until one day in 2025 only recombinative reversed phased algos start to form and with them. Human thought, emotion and judgement.

With only computers choosing investments and positions in hyper-fractions of seconds. You will find nothing in the space of either a bid or ask. They will only exist in the ephemeral nature of computer process.

Its not a bad thing these HFTs only a loss of human priceing.

As much as your mourn the death of human expression. These computer algos are the next stupid thing in human thought.

Its worth to step back and acknowlage the greatness of such... stupid.  Stand in awe of it.

All these computer programes thinking and acting for humans.

Horrific and wonderful.

 

 

 

ToddGak's picture

Used to be that the Space and Defense programs drove technology forward.  Now it's high finance.  Guess that seems about right.

cougar_w's picture

I don't think the Financial sector is doing anything cutting-edge here. They are certainly not advancing the science. I'm with Volker on this one; the last great innovation from the banking sector was the ATM.

The algo thing is interesting but just an application of existing tools. The algos are using mathematical methods that have been around for 30 years. The actual trading code is probably really simple Fortran or C, just enough to wrap the math libraries in a short loop and parse the incoming market data into fields. Probably 15 lines of python, if you knew what you were doing.

Where these guys are pushing things is in the networking. They are wired for the shortest possible network latency, over the fastest path they can find. But that's not anything you cannot fix with money. It's hardware and lots of it, and then leverage to get a feed as close to the market making engines as you can.

Any good math student with a girlfriend working the IT department at one of the exchanges could run with these fuckers. $5K for a hot server build, a few weeks to code the bitch up, and then your GF drops it in the rack with a "don't ask me" look on her face if anyone notices. Probably happens every day.

Someone should make a movie. Yeah, I have the concept script right here.

fuu's picture

"Used to be that the Space and Defense programs drove technology forward.  Now it's high finance.  Guess that seems about right."

 

It was called the military industrial complex to keep the banks out of the limelight. It takes money/resources to build a military with industry.

HarryHaller's picture

...and they shall call it NEUROMANCER.

jo6pac's picture

Where is the govt. ws is the govt. and can moniter themselves.

moofph's picture

...they've taken the "pre-crime" mentality and are applying i to electronic droids as a sort of "pre-investment" algo-mole.