Oct

27

Spoofing, from Jeff Watson

October 27, 2015 |

"U.S. to prosecute high-speed trader in first criminal spoofing trial."

Has it ever occurred to anyone that some of these "spoofed" orders were put out there, not as spoofs, but as real orders to get filled? The markets are still a game of deception, and spoofing is a valuable tool. I knew guys that would bid for 3 mm bushels a half cent under the market and would pull the bid when it got close (it was a primitive spoof but it worked). Sometimes traders put out the "spoof orders", got hit and were able to adjust their position, whatever way it was, and the counterparty has no clue what's going on.

There's always someone out there that, for whatever reasons, will always take the other side of a huge order. There is also an idea going around that if you can hit and fade a spoof order you will make money, and this is not necessarily true. As an aside, in the grains, it's usually easier to get your price for a half million bushels than if you were are trying to buy or sell 5,000 bushels where you will get dicked around for a quarter cent. There is always a big commercial, grain company, hedger, or large spec willing to take the other side of a big order, and there is a good chance you will get filled at your price.. 


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4 Comments so far

  1. The Doc on October 27, 2015 5:07 pm

    Be one with the idea that has the government in its grip because they control the money supply. Caveat is when they’re wrong!

    Neither life nor death is the answer. Balance is. Find the middle ground between Buddha and Ayn Rand.

    Nobody knows the answer keep searching and be creative, programming and empiricism are tools for your mind they push you in the direction of reality but you can never grasp it.

  2. Bryan284 on October 28, 2015 6:24 pm

    I’ve often wondered what would happen if every time you submitted an order it was active for a minimum of 5mins, 10min, etc…. meaning it was “locked” in the stack for that timeframe and the participant couldn’t pull it.

    Also, I’ve wondered: what if the market was only open for 2hrs each day? Or even, just 2 days a week? Perhaps it would force participants to take more substantiated positions?

  3. jim on October 29, 2015 4:35 pm

    I agree that spoofing should be allowed but these guys are so fast that orders are cancelled AFTER I submit my order. Only the fastest can hit them. There should be a min time to post a quote IMO. Then there would be no spoofing lol. These algos only post serious size when they are sure they won’t get filled, thus there is no risk to their spoofing.

  4. Elle on October 30, 2015 10:28 am

    This is true of all contracts. The bigger, the easier. The smaller, the more work. And not just in proportion to profit, either. One wonders why.

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