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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (17887)	2/19/2011 6:39:58 PM
From: ahhaha	Read Replies (3) \| Respond to of 24758

Flash Crash report, part 3 To give you an idea of the scale of action that transpires which the flash crash report authorities are trying to deal with, in one stock, FCX, yesterday during some arbitrary second of the trading day, 10:07:25, it had 180 atomic actions of which 72 were executions in 55 group changes where a group is a collection of similar actions, either trade or BA, within the granularity limit of about 1 microsecond of the consolidated tape. Clearly, this is the result of total electronification of the stock market and it exceeds the ability of humans to intervene for any reason. Because there's an ongoing struggle, a free market brawl, as it were, there's no problem about this intensity of action. Always, it will tend to approach what people believe something is worth, as long as authority doesn't try to intervene to make it "fair". The above mentioned struggle, dog eat dog, inherently makes the outcome fair. It is for this reason that the Flash Crash was entirely synthetic, just like the '87 crash, conducted by rampaging robots inside of the ability of humans to interfere. That's why the flash crash happened in its entirety over 2 minutes time with price ending up where it started. Whereas, my machines picked up the crash, I didn't. Right before it started I went to take a piss and came back right after it finished. I thought my feed was in error, just like everybody else. I don't find many posts on Yahoo boards these days blaming the MMs for manipulation. This represents a dramatic reduction from 5 years ago. I think these pubic traders finally figured out that such complaints made them look stupid so they stopped making them. Human MM involvement now only accounts for 10% of the action. It also should be noted that even in the more obscure stocks lightly traded, at least under $50, there's rarely a spread greater than 2 cents. The actives, which represent 95% of the NAZ and NYSE listeds, have 1 cent spreads. How much "liquidity"(I use this term because that's what other sophisticated pros do, although none of them can quite define what they mean) is at these BAs? It's almost limitless. Within 1 microsecond the HFTs (40+% of action) and many others will rush to supply liquidity for WHATEVER size is dumped at these bounds, and without "sliding". Internalizers, composed of both OTC market makers and block positioners, handle orders of their own customers or customers of other broker-dealers. Those acting as OTC market makers appear to handle a very large percentage of marketable (immediately executable) order flow of individual investors. Internalizers tend to use their own capital to trade opposite of retail customers. Normally, they match or provide price improvement compared to the NBBO that customers would receive if their order were sent directly to an exchange. If an internalizer is unwilling to match or improve the NBBO for a particular order, it will route the order to other trading centers. In doing so, it will generally prefer trading centers that do not charge an access fee, including dark pools and even other internalizers, but if the order is not filled within a short time it will be routed directly to an exchange displaying the best available price.