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Politics : Formerly About Advanced Micro Devices
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To: Bill Jackson who wrote (107415)4/23/2000 1:24:00 AM
From: Joe NYC  Read Replies (1) of 1577834
 
Bill.

Well in the same way the methods to eliminate front running are well known...namely an electronic matching system.

Agreed.

The internet lemming effect will become more powerful and some time lag will be needed to stop purposeful manipulation by people who second guess trading programs and sell/buy certain volumes and prices to induce a market move

Please explain. How do you induce a market move? Perhaps by buying of selling a lot of shares?

which they sell/buy into and make a few tiny bits.

Let me see if I follow:
1. Ok, suppose you the stock was at $50.
2. You buy 100 shares at $50
3. Now the manipulation: You put in an order to buy a million shares, driving the price to say $52. You spent between $50 and $52 million.
3. Taking advantage of your manipulated price: You sell into this move - you sell your original 100 shares at $52, realizing gain of full $200.

So far so good, the plan is working, except a minor problem: You have a million shares of a stock that you don't want.

I think this is the myth of the market manipulation that a lot of people believe exists, but I don't. What am I missing?

Anyway, I don't see the manipulation to be the danger of an electronic matching system. Actually, any attempt at manipulation will always be a losing effort in a fully transparent system.

But you always leave room to get screwed by leaving stop orders in volatile markets that we are experiencing, especially with illiquid securities.

Joe
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