| | | This isn't what causes a "flash crash"....this shit has been going on ever since computers
have been able to be used for trading......no liquidity causes "flash crashes" and the only
people that can do that are the big boyzzzz like Citadel, JPM, etc, etc.
The point of this -- according to the federal prosecutors, the Federal Bureau of Investigation and the Commodity Futures Trading Commission, who are not happy with Sarao -- is that by placing all these fake sell orders, Sarao would artificially drive down the price of the E-mini futures. It's classic spoofing: He'd place a lot of big orders to sell, everyone else would say, "Ooh look at all those big sell orders, I'd better sell too," they'd sell, the market would go down, he'd buy, he'd turn off his algorithm, everyone else would say, "Oh hey never mind, things are great again, there are no more big sell orders," they'd buy, the price would go back up, and Sarao would sell the futures he'd bought at a lower price a moment ago. We've talked about spoofing before, and I've always been a little troubled that it works, but what can I say, it works. |
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