Increase in computerised trading for rigging the market

• 6 January 2010

• #1

Nero64

Joined

23 August 2008

Posts

227

Reactions

0

Not sure if any of you saw an article in the newspaper a week or so ago about the increasing level of computerised trading to bid prices higher. Small offers were put in to move prices higher. The regulators are investigating and have already tried to clamp down.

I am currently long on a stock valued around $3.80, and 2/3rds of the transactions are like this:

7
1
0
3
6
5
16
24
62
33
17

my question is how could people sell such small numbers of stock. Wouldn't the brokerage costs negate any profit with just small amounts?

 

• 6 January 2010

• #2

L

lukeaye

Joined

11 September 2009

Posts

476

Reactions

0

Very interesting, i have also noticed this. I have noticed in market depth often, very small lot sizes going through, which as you say, would be worth nothing as the brokerage negates them.

 

• 6 January 2010

• #3

B

bilo83

Joined

26 November 2009

Posts

24

Reactions

0

Brokers pay an ad valorem trading fee (.% of trade value) so as long as they can book all the small trades before DVP it doesn't cost them any more than making fewer large trades. They wouldn't be able to do it at $20 a trade!

 

• 6 January 2010

• #4

nunthewiser

Joined

27 February 2008

Posts

4,670

Reactions

10

algorythym trading ........... can be done through certain brokers ....... already threads and info on it here , try a search.

 

• 7 January 2010

• #5

C

condog

Joined

24 October 2009

Posts

1,948

Reactions

0

yes it happens on all stocks yesterday even WOW was doing it....

They subscribe or pay the broker a monthly / annual fee to use thier trading platform and then get the per transaction fee either free or on a very low percentage.... in general they pay through th nose all up.....

I have no idea how prifitable it is as most the ones Ive known about quiclky dissapear, end up a scam, off with the money, etc etc etc

Just noise in the market, ignore it...but it does bave implications for those trading CFD, options and using stop losses etc......some of them seem to be copping silly triggers on tiny volumes......

 

• 7 January 2010

• #6

jono1887

Joined

24 April 2009

Posts

1,114

Reactions

0

Nero64 said:

my question is how could people sell such small numbers of stock. Wouldn't the brokerage costs negate any profit with just small amounts?

Click to expand...

There are brokers that charge an daily fee, $30/day to trade that stock as many times as you like.