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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Andrew who wrote (17582)	8/22/2003 7:36:57 AM
From: Louis V. Lambrecht	Respond to of 39344

Andrew - manipulated? Naaah! Craftsmanship. I read in June (I guess for Jume) that 40% of the trades were computer generated. There are some mighty risk management and crowd behaviour analysis program out there. Most signals on which traders would react have their probabilities. These programs also will split your orders (in size, fake/real orders,...)in such manner that your probabilities of profit will be optimum. Some times a small order from your part (the software runs what-ifs) can start a move. And as you created that move, you are the one who is the first well positionned. The fun comes when those black-boxes trade against eachother. You can spot these occurences near the close of a futures session when you have access to the depht of markets data. Bid/ask prices and volumes go up and down with no order. Less funny, it can happen through the day, and one program is taken in default. This is, IMHO, what stands behind the "rumors" of a large brokerage house employee having entered a "wrong" order. No problem, the exchange will kill the trades. Most trading platforms, including those for the retail investor, have a "fat fingers" setting which prevents those "wrong" orders. So, that "wrong" order must have been generated somewhere else. <g> I am out of trading on indicators, but choose to trade patterns and trendlines on a longer timeframe (I hope) than the black-boxes.

To: Andrew who wrote (17582)	8/22/2003 8:54:16 AM
From: tyc:>	Respond to of 39344

Re "Manipulation" Here's one possibility! There was some talk several months ago about market pricing of gold stocks (CIBC paper). Even Pierre Lassonde agreed that they seemed to be priced at their NAV PLUS a call on the price of gold, which could be measured by the usual option pricing formulas. If the market price contains a call on the price of gold, the usual way to hedge this element would be to short gold when it is strong and cover the shorts when it weakens. See recent explanations by DAK on option trading. This kind of hedging has a stabilizing effect on the price; it's just the opposite of MOMO trading where holders dump the underlying because of weakness. To quote Wayne BWDIK !