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August 11, 2011 – Comments (21) | RELATED TICKERS: S , E , C

No wonder the average retailer is running away from the market and into TBills (despite what the S&P thinks).  This whole week has been more about computers running wild than anything, and it needs to be addressed. High frequency trading needs to be reigned in.

Also end double and triple ETFs (both bull and bear ones).  The only real purpose they serve is to gamble on.

Finally restore the damn uptick rule already.  At least it will force those computers to take some kind of breather.

The SEC has the absolute power to do the above. 

While I sure many traders love this kind of volatility, it just keeps the real investors (if they even exist anymore) away. 

21 Comments – Post Your Own

#1) On August 11, 2011 at 8:47 PM, VExplorer (29.68) wrote:

Do you remember when "speculation" was a crime? Just twenty years ago in USSR. And I am not talking about stock. Just "to buy low" (pair of jeans, for example) and "sell high" - it was a crime. You are calling to the same way. ;)

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#2) On August 11, 2011 at 8:59 PM, Frankydontfailme (27.51) wrote:

There's nothing wrong with buying low and selling high (or visa versa). There is something wrong with using computers to manipulate the bid and ask prices, pulling your bid and shorting the stock at light speed. It's the equivalent of me switching the label on the jeans... its stealing.

Computers are fine, manipulating the market is not. 

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#3) On August 11, 2011 at 9:01 PM, awallejr (79.65) wrote:

This isn't an issue of speculation, this is an issue of breaking the system.  It really is becoming a completely rigged game now.  That is why the retailer is now hiding in TBills.  I am not calling for people to stop trading, I am calling for reigning in the HFT computers.

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#4) On August 11, 2011 at 9:27 PM, ChrisGraley (29.71) wrote:

It's a response to a game that was already rigged to begin with.

Expecting government crooks to regulate corporate crooks is expecting too much. 

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#5) On August 11, 2011 at 9:32 PM, VExplorer (29.68) wrote:

Do you know why it is in favor for my strategy? It is a part of it. Can you explain why you are not using it? May be you just don't know how?

I'm 20 years Software Eng. with MS in Math and Physics. I'm not using computers, automated/mechanical trading systems and so on... More than that, I have not seen any advantage of these. But I see well advantages of small investor. BTW: short selling ban of European autorities - it is restrictions on small investor, in favor of elites (big one always will be able create syntetic short or short overseas).

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#6) On August 11, 2011 at 10:36 PM, awallejr (79.65) wrote:

#5 are you saying are using high frequency trading computers and running double and triple etfs that have no real value as an investment tool aside from distorting the market? 

I don't care about banning short selling.  I do if it is naked shorting.  I don't care about selling, I do care about shark attacking because there is no longer an uptick rule.  I don't care that people invest into ETFs, I do care about those double and triple ones that are designed to distort the market.  And what I finally care about is the total lack of any meaningful response by the agency created to protect market integrity.  Under Bush we had a mouse of a Commisioner.  Under Obama it is looking to be the same.

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#7) On August 11, 2011 at 10:58 PM, whereaminow (< 20) wrote:

by the agency created to protect market integrity.

ROFL, you think the SEC was created to promote market integrity?  What in the world is wrong with you? Haha, I don't think you understand the meaning of the word integrity.

David in Qatar

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#8) On August 11, 2011 at 11:02 PM, Momentum21 (51.35) wrote:

It will take an implosion of one of those leveraged ETFs to wake everyone up. It seems overdue...

The HFT stuff distorts the markets but it is probably a lot like gang violence...a terrible thing but most injuries occur only to those who participate.

The uptick rule seems fair...it seems like it has become more prestigious to take a company down than to invest in a long -term winner these days. Controlling the attacks seems like the low hanging fruit. 

 

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#9) On August 11, 2011 at 11:05 PM, VExplorer (29.68) wrote:

#6 are you saying are using high frequency trading computers and running double and triple etfs that have no real value as an investment tool aside from distorting the market?

Yes, I think these 3xETF best tools I've ever seen (if you know how to use it). And I'm not day trader, I trade ~twice per month. I think you are talking about 3xETF, but you are not using it. And if you will use it "for distorting the market" you, probably, will deep in red.

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#10) On August 11, 2011 at 11:23 PM, VExplorer (29.68) wrote:

#8 it seems like it has become more prestigious to take a company down than to invest in a long -term winner these days.

It should be equal at least (but to be predator is always harder). Why "to be carp" should be more prestigious than "to be bass". I'll be equally glad if I'll found some long-term investment tools as well as if I'll recognize new Enron

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#11) On August 11, 2011 at 11:28 PM, Momentum21 (51.35) wrote:

#10 - I agree that it is harder. I don't disagree with short selling and think it is healthy for the market. There are equally as many or more pumpers out there who are just awful people. 

My comment wasn't covering the full spectrum. I agree with you.  

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#12) On August 11, 2011 at 11:39 PM, awallejr (79.65) wrote:

ROFL, you think the SEC was created to promote market integrity?

In theory it was, in reality it hasn't.  Personally I would replace the current Commissioner with Eliot Spitzer, despite his call girl fetish. 

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#13) On August 11, 2011 at 11:44 PM, awallejr (79.65) wrote:

VExplorer, nope I am simply hiding in yield now.  I add a little on the big down days. But those types of etfs are gambling tools.  As for the new Enron, Cramer keeps pumping it (EOG which used to be Enron).  He likes to pump the oil shale play, but I submit those wells will be fast depleters and before you know it your profit turns into a loss because the HFT computers will pass you by in a nano second. 

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#14) On August 12, 2011 at 12:04 AM, KommanderKhaos (< 20) wrote:

Even assuming that your contention of HFT needing to be reined in was correct, then how would you propose going about doing that (and please offer realistic answers)? What does 'reining it in' even mean? Banning it altogether, or what?

High frequency trading by computerized algorithms just seems part of the new reality of the stock market, and I'm not quite sure how that could be enforceably curbed (much less stopped) even if we wanted it to be. 

Basically I've just learned to accept it as part of what is and what will be from this point forward, and so I just try and work around that reality or work with it. Either way it doesn't matter much to me. The only thing that matters is the bottom-line and that I'm making money in the stock market despite HFT or any other artificial obstacles, and that's a continuing work in progress. 

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#15) On August 12, 2011 at 12:04 AM, VExplorer (29.68) wrote:

#13 awallejr (copied from another blog)

HFT, it is NOT computers. It is PEOPLE who are programming strategies. You can have your own if you smatr enouth. Ten years ago I did some money by programming strategies for individual investors on platform of StrategyRunner. I'm not sure they are in business, but, probably, you will find platform for your HFT if you really smart. It is NOT exclusive club of big guys.

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#16) On August 12, 2011 at 12:12 AM, awallejr (79.65) wrote:

KommanderKhaos

You are right I don't have a solution on that one.  Hoping someone smarter than me does tho.

VExplorer

Yeah we are debating in 2 different threads heheh, so here is my reply there, here;)

. . . it is still algorithms in the end, the same algorithms that caused the flash crash and hurt many an innocent investor, and the same algorithms that will continue to do so because they can.  You are right I don't engage in hft mainly because I am an investor not a trader.  But make no mistake the little guy has no shot in using them so it really is an exclusive club.

 

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#17) On August 12, 2011 at 12:41 AM, mtf00l (47.99) wrote:

HFT by itself may or may not be a problem.  When the market makers receive the trades and front run based on the retail trades coming in a nano second before the retail trade is made, is that fair?  That, and when GS pursues federal legal action against a programmer who had a copy of their algorithm makes me wonder even more.  That, to me, sounds like competitive advantage.  How can I become a "market maker"?  Then, I'll apply resources to acquire a competitive advantage.  Till then my trades, daily or long term are statistical fodder for the investment houses before they're even executed.

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#18) On August 12, 2011 at 1:10 AM, awallejr (79.65) wrote:

and when GS pursues federal legal action against a programmer who had a copy of their algorithm makes me wonder even more.

I forgot about that one.

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#19) On August 12, 2011 at 9:20 AM, VExplorer (29.68) wrote:

#17 when GS pursues federal legal action against a programmer who had a copy of their algorithm makes me wonder even more.

 Why? Do you think GS has no rights to protect IP? or do you worry about who and how will use it? I cannot find any reason to worry about it at all.

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#20) On August 12, 2011 at 1:12 PM, mtf00l (47.99) wrote:

#19 I'll bet you feel steroids in sports is a none issue as well.

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#21) On August 12, 2011 at 5:18 PM, VExplorer (29.68) wrote:

mtf00l I feel an issue in most of sports in general. Do you feel weights categories are an issue? Do you feel anatomical differences in general are an issue? Lets create few stock markets ranged by IQ of trader/investors!

BTW, I've knew no sportsman not on steroids. All regulations of the Olympic Committee just barier to bad financed teams/sportsmen who cannot afford "legal" pharmacy support. Only person itself should care about steroids he is using.

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