Market Manipulation

I have just joined...

I spreadbet...

The main reason for failure is that the index (whichever one you chose) is mediated by Integrated Algorithms and your 'bet' is an axis about which the minnows of the numerous Algo generated bets can use to gain income.

No matter how well you forecast the prevailing sentiment, your own placement distorts what was right at the time you made your decision.

The reason is very simple...

Say you place a £1 bet on the NYSE and go long (buy) and do so for good reason, you will be right, but what you are seeing is the swarm of micro-bets moving the market and it is pure chance that you coincide with the swarms movement.

The average 'bet' in this swarm of tens of thousands/millions is $2,500 gross...

Your £1 bet represents about $25,000 and is a target, it is as if a damned great white swan suddenly appeared in a murmuration of Starlings.

You stand out like a sore thumb and the algorithms that control the swarm of small bets use your 'position' to deflect and turn to make the most of this huge intrusion.

The Algorithm at its heart is not too far removed from the algo that controls the 'Angry Birds' (a strange, but fascinating irony!) motions.

So there is no need to feel defeated that you are in some way 'a failure' if you don't win, you simply are not meant to.

But Algos can be backed into a corner, it's just very difficult.

Other tricks of the 'Industry'...

First, don't be fooled into believing that all flash price jumps are 'accidental', they are not and are often used to produce a 'result' against you if you do place the Algos and Quants in an awkward position.

Quants (if you don't know what they are) are two types of individual (Humans!!!) first they are the guys that write the Algo-progs, basically NERDS... the other are the less autistic chaps who can communicate effectively with rest of the world and these chaps tinker with the Algo-progs to make them 'feel' right (it is this tinkering that effectively constitutes your only chance to win or to be a 'winner'!)

It is these latter 'Quants' that will without the slightest feeling of shame flash down a price (or up) if one of the 'Industry' names requests it.

This happens regularly, at least once a day in the main indices, sometimes 3 or 4...

This behaviour does however leave 'tell-tales' across the net... more on those later.

No-one in the 'Industry' is immune to doing this, the entire edifice is based on the requirement of 'Plausible Deniability' and those that speak or voice the 'Mission Statements' are kept out of the picture as much as possible.

Enough for now... I might get 'banned' for telling the unpalatable truth about this 'Industry' but you do have the right to know.

Have lovely weekends!

Mycroft Algoman said:

I have just joined...

I spreadbet...

The main reason for failure is that the index (whichever one you chose) is mediated by Integrated Algorithms and your 'bet' is an axis about which the minnows of the numerous Algo generated bets can use to gain income.

No matter how well you forecast the prevailing sentiment, your own placement distorts what was right at the time you made your decision.

The reason is very simple...

Say you place a £1 bet on the NYSE and go long (buy) and do so for good reason, you will be right, but what you are seeing is the swarm of micro-bets moving the market and it is pure chance that you coincide with the swarms movement.

The average 'bet' in this swarm of tens of thousands/millions is $2,500 gross...

Your £1 bet represents about $25,000 and is a target, it is as if a damned great white swan suddenly appeared in a murmuration of Starlings.

You stand out like a sore thumb and the algorithms that control the swarm of small bets use your 'position' to deflect and turn to make the most of this huge intrusion.

The Algorithm at its heart is not too far removed from the algo that controls the 'Angry Birds' (a strange, but fascinating irony!) motions.

So there is no need to feel defeated that you are in some way 'a failure' if you don't win, you simply are not meant to.

But Algos can be backed into a corner, it's just very difficult.

Other tricks of the 'Industry'...

First, don't be fooled into believing that all flash price jumps are 'accidental', they are not and are often used to produce a 'result' against you if you do place the Algos and Quants in an awkward position.

Quants (if you don't know what they are) are two types of individual (Humans!!!) first they are the guys that write the Algo-progs, basically NERDS... the other are the less autistic chaps who can communicate effectively with rest of the world and these chaps tinker with the Algo-progs to make them 'feel' right (it is this tinkering that effectively constitutes your only chance to win or to be a 'winner'!)

It is these latter 'Quants' that will without the slightest feeling of shame flash down a price (or up) if one of the 'Industry' names requests it.

This happens regularly, at least once a day in the main indices, sometimes 3 or 4...

This behaviour does however leave 'tell-tales' across the net... more on those later.

No-one in the 'Industry' is immune to doing this, the entire edifice is based on the requirement of 'Plausible Deniability' and those that speak or voice the 'Mission Statements' are kept out of the picture as much as possible.

Enough for now... I might get 'banned' for telling the unpalatable truth about this 'Industry' but you do have the right to know.

Have lovely weekends!

Click to expand...

I disagree and this is why:

For some. For others it's more like, snakes and ladders.

Would you care to expand on your reasoning... I think I must have lost some of your text...

It seems that you're suggesting the market moves because of a £1 bet.

The market doesn't care about such things.

If it did, hedge funds would go around placing £1 bets so that the market moved how they wanted.

The market does not care about you. Unless you're trading in huge size you're irrelevant.

There is luck, and there is randomness, but this is not a game of pure chance.

No intellect is ever going to overcome Algos and Quants.

The only conclusive way to win is by acting in unison after placing a judas goat in the market to take the hit and then divvying up the proceeds, that works very well indeed.

As individuals it is 'hit and miss' and pure luck in its most raw state.

Mycroft Algoman said:

No intellect is ever going to overcome Algos and Quants.

The only conclusive way to win is by acting in unison after placing a judas goat in the market to take the hit and then divvying up the proceeds, that works very well indeed.

As individuals it is 'hit and miss' and pure luck in its most raw state.

Click to expand...

Wrong!

Shakone said:

It seems that you're suggesting the market moves because of a £1 bet.

The market doesn't care about such things.

If it did, hedge funds would go around placing £1 bets so that the market moved how they wanted.

The market does not care about you. Unless you're trading in huge size you're irrelevant.

There is luck, and there is randomness, but this is not a game of pure chance.

Click to expand...

No I'm suggesting that, but all such bets are way-points.

No Hedge Fund would join this fray as the numbers don't compute for them...

But the real test is if you take the number of trades in any given day and the amount traded and find the resulting figure, the amount might surprise you, the average is less than $8000 and that includes the thousands of bets placed by people who cannot place less than £1 or £2 at any one time (25 and 50 thousand dollars)...

Another 'test' is to look at the drops or rises in prices during the day... this has been largely aligned now across the 'Industry' to coincide with the now almost universal default of 0.2% by narrowing this down for the majority the range of the take is narrowed to 0.25% so making the reaping of funds easier.

You can also see the grouping of these 'big dollar' singletons and them being culled en masse.

Shakone said:

Wrong!

Click to expand...

One word replies don't really explain your thinking or reasoning, please tell me more... it what way do you consider me wrong and what is your reasoning?

Mycroft Algoman said:

No I'm suggesting that, but all such bets are way-points.

No Hedge Fund would join this fray as the numbers don't compute for them...

But the real test is if you take the number of trades in any given day and the amount traded and find the resulting figure, the amount might surprise you, the average is less than $8000 and that includes the thousands of bets placed by people who cannot place less than £1 or £2 at any one time (25 and 50 thousand dollars)...

Another 'test' is to look at the drops or rises in prices during the day... this has been largely aligned now across the 'Industry' to coincide with the now almost universal default of 0.2% by narrowing this down for the majority the range of the take is narrowed to 0.25% so making the reaping of funds easier.

You can also see the grouping of these 'big dollar' singletons and them being culled en masse.

Click to expand...

Pointless to explain. You're obviously on a windup and haven't a clue what you're talking about.

Right, as we are on a roll...

Lets talk 'Dark Pools'...

Their real use is to safeguard many of the Hedge Funds from being in the Public Marketplace.

To avoid being swayed about by the gambling content of the DJI in particular and the FTSE less so.

Effectively deals are done between buyers and sellers of Publicly listed businesses behind closed doors and these deals (often done a month or so ahead of actual movement) dictate the overall movement of the market, not the day to day but the term destination.

It is as if I asked you to go to your nearest church, you might go via the fields and jump ditches or you might take the path and you might go via the Pub... but you will get there and that is what counts... and that is what happens.

Shakone said:

Pointless to explain. You're obviously on a windup and haven't a clue what you're talking about.

Click to expand...

Not even vaguely aimed at 'winding up' anyone.

If you don't to explain then fair enough, I would have liked to have heard/read your thinking on this as you seem as 'positive' as I am but in the polar opposite camp.

Thanks anyway.

Mycroft Algoman said:

Not even vaguely aimed at 'winding up' anyone.

If you don't to explain then fair enough, I would have liked to have heard/read your thinking on this as you seem as 'positive' as I am but in the polar opposite camp.

Thanks anyway.

Click to expand...

Ok. Prove that a £1 bet moves the market significantly.

Prove that the total sum of all bets on the market ina day is $8000.

Prove that no intellect can ever overcome an algo (or at least provide some evidence)

Prove that no intellect can ever overcome a quant in the field of trading (or at least provide some evidence)

Prove that this trading lark is all pure luck in its most raw state.

If you can back these statements up, I'll be willing to reply again.

Shakone said:

Ok. Prove that a £1 bet moves the market significantly.

Prove that the total sum of all bets on the market ina day is $8000.

Prove that no intellect can ever overcome an algo (or at least provide some evidence)

Prove that no intellect can ever overcome a quant in the field of trading (or at least provide some evidence)

Prove that this trading lark is all pure luck in its most raw state.

If you can back these statements up, I'll be willing to reply again.

Click to expand...

OK, I'll do my best...

The £1 bet... we all believe we act individually, but the reality is that as a group those attracted to this form of speculation will be surprisingly similar in their viewpoint on the market indicators, we will all 'recognise' the same cues.

So although you may think that you alone placed that £1 bet at that particular time, you didn't, within a few seconds the same 'indicators' that lead you to take a position lead many others to the same conclusion.

It is the 'job' of these algorithms to collate and assess the best way to go to make the best profit for their 'masters'.

Your good judgement plays no part at all in that decision, because the reality is that when tested most people draw the same conclusion and this correlates almost exactly with the 85% I mentioned earlier.

Any study of Human Decision Making will confirm this exactly.

It is why we have such a thing as the 85%ile as a norm form decisions... we're good at it.

You can obtain the figures yourself every day, the raw info is all over the net.

A single intellect cannot overcome the influence of an Algorithm, because it is not an intellectual entity, it is a mathematical equation and immutable. A quant might tinker at the edges but that is really to just keep the swarm from turning in on itself and going down. (they all err on the side of the negative)

Your reluctance to outline your position is mystifying to me but you must have your reasons so feel free to ignore me if you wish.

Mycroft Algoman said:

OK, I'll do my best...

The £1 bet... we all believe we act individually, but the reality is that as a group those attracted to this form of speculation will be surprisingly similar in their viewpoint on the market indicators, we will all 'recognise' the same cues.

So although you may think that you alone placed that £1 bet at that particular time, you didn't, within a few seconds the same 'indicators' that lead you to take a position lead many others to the same conclusion.

It is the 'job' of these algorithms to collate and assess the best way to go to make the best profit for their 'masters'.

Your good judgement plays no part at all in that decision, because the reality is that when tested most people draw the same conclusion and this correlates almost exactly with the 85% I mentioned earlier.

Any study of Human Decision Making will confirm this exactly.

It is why we have such a thing as the 85%ile as a norm form decisions... we're good at it.

You can obtain the figures yourself every day, the raw info is all over the net.

A single intellect cannot overcome the influence of an Algorithm, because it is not an intellectual entity, it is a mathematical equation and immutable. A quant might tinker at the edges but that is really to just keep the swarm from turning in on itself and going down. (they all err on the side of the negative)

Your reluctance to outline your position is mystifying to me but you must have your reasons so feel free to ignore me if you wish.

Click to expand...

No reluctance. My position is clear. It is that you're wrong, and don't know what you're writing about.

Your best is to not prove a single one of your statements or even provide any concrete evidence. That's you doing your best.

This is my favourite of your posts

The reality (sadly due to algorithmic interference) is that on average you will lose 85% of time and in volatile times closer to 95% no matter which way you go.

We have tested this with live sums on live accounts. AT ALMOST ALL TIMES OF DAY!

The best time to get perhaps a 75 to 80% chance is in that period between 15.15 and 16.00 UK Time.

This is the reality.

Click to expand...

Your favourite is a good one.

You will be wrong in that degree because that is how Human decision making works...

We are actually quite good at making the 'right' decision, so if 100 people are given a set of identical parameters in a subject they have an aptitude in then 85 of them will go in one direction and that is the exact opposite direction that means a profit for the provider of this 'service'...

The further reality is that a substantial but varying percentage of the 'price' of any indices or exchange price is froth and bubble.

You can see this in particular today/yesterday... just take the graphs for the last 5 days for the DJI and the Nasdaq... notice the DJI has been overtly volitile and has 'lost' much of the gain engendered by Bernankes 'no tapering' announcement... yet the less speculative Nasdaq has largely held the gains and going back a few days further, the Nasdaq dropped in response to proper figures, but the DJI just maintained the 'high'...

The reality is that today's drop is not 'real' in the sense that it is simply the removal of some of the 'froth and bubble' on the surface and today has simply been about taking a huge amount from placements made just after the sharp rise.

The Nasdaq has less Froth and more beer than the fizzy sasperilla that is the DJI.

Interesting points being discussed by Mycroft Algoman and Shakone.

I’m far too green to claim to be able to understand more than a fraction of what’s being debated, but if I’ve got it right – Mycroft is saying that people are good at almost unanimously coming to the same conclusion based on any given set of ‘facts’ or parameters. But that set of facts/parameters most retail traders work with aren’t the real ones that actually drive the various markets as much of the major deals are done off-book, off-exchange, ahead of the event and in camera – which is why us mug punters generally come off worse. Which seems to make sense, whether true or not is another issue of course.

And I think what Shakone is saying is that even the cumulative impact of all us mug punters’ £1 bets aren’t going to move any market. Which is also something that makes complete sense to me too.

What I find difficult to get my head around is if Mycroft is suggesting the mug punters are deliberately fed duff information. While it is not impossible to conceive of ‘leaks’ intended to drive prices one way or the other on a given asset or class of assets that would represent only a small part of the data used in their decision making process. The cumulative mass of retail traders may indeed make decisions that are remarkably consistent with one another – and be totally incorrect too – but they make these decisions based on the entire universe of information available to them all. Syria and the US/Russia position. Whether we’ve had a good summer. Housing prices in Florida. Anything and Everything from the media. The price of beer. Who gets elected in Australia and Germany. The cooling of the BRICS. Recession. Olympic and Jubilee lift. Some rational – most not. But the sum total of the entire universe of information is absolutely huge in relation to any deliberate tweaking that could expect to be achieved. Or have I missed the scale, size and pernicious nature of this controlling interest?

If I have misunderstood or misinterpreted either Mycroft’s or Shakone’s positions the error is entirely mine and all of the above can be safely ignored.

Purple Brain said:

Interesting points being discussed by Mycroft Algoman and Shakone.

I’m far too green to claim to be able to understand more than a fraction of what’s being debated, but if I’ve got it right – Mycroft is saying that people are good at almost unanimously coming to the same conclusion based on any given set of ‘facts’ or parameters. But that set of facts/parameters most retail traders work with aren’t the real ones that actually drive the various markets as much of the major deals are done off-book, off-exchange, ahead of the event and in camera – which is why us mug punters generally come off worse. Which seems to make sense, whether true or not is another issue of course.

And I think what Shakone is saying is that even the cumulative impact of all us mug punters’ £1 bets aren’t going to move any market. Which is also something that makes complete sense to me too.

What I find difficult to get my head around is if Mycroft is suggesting the mug punters are deliberately fed duff information. While it is not impossible to conceive of ‘leaks’ intended to drive prices one way or the other on a given asset or class of assets that would represent only a small part of the data used in their decision making process. The cumulative mass of retail traders may indeed make decisions that are remarkably consistent with one another – and be totally incorrect too – but they make these decisions based on the entire universe of information available to them all. Syria and the US/Russia position. Whether we’ve had a good summer. Housing prices in Florida. Anything and Everything from the media. The price of beer. Who gets elected in Australia and Germany. The cooling of the BRICS. Recession. Olympic and Jubilee lift. Some rational – most not. But the sum total of the entire universe of information is absolutely huge in relation to any deliberate tweaking that could expect to be achieved. Or have I missed the scale, size and pernicious nature of this controlling interest?

If I have misunderstood or misinterpreted either Mycroft’s or Shakone’s positions the error is entirely mine and all of the above can be safely ignored.

Click to expand...

From what I have read, Mycroft Algoman is saying that the dastardly Algo's will always beat humans because we are weak and have emotions. All we need to do is teach machines how to love and we might have a chance.

I don't buy any of this.

For a start FTSE is an index and not a tradeable instrument on the real market. Thus anyone betting £1pp on FTSE must be doing it through a proxy provider who make up their own prices which reflect the index. Thus there is no prospect of that £1 reaching the market other than very indirectly as part of a hedge by the provider if they feel the need to do so (that hedge would have to be on futures of course).

SB companies can and do tinker with their prices to some degree, but they can't overegg that pudding for three reasons: 1. They'd upset their regulators; 2. Competition - they'd lose clients hand over fist; 3. They'd get taken to the cleaners by smart operators taking advantage of the temporary "artificial" price discrepancy.

It takes some imagination to believe that they ring up some algo/quant operator and ask them to engineer a 20point spike in the futures in the hope that will reflect through to the main index and enable them to stop out a lot of their £1 punters. Anything's possible in this world I suppose

What I have said is true, every exchange has Dark Pools and we punters are not privy to the prices on the deals done.

The exchanges don't even deny their existence.

The info is what it is... if the index or exchange has a 'head' (like a beer) of varying thickness then that gives the markets the opportunity (which they take without blushing) there is a point when there is real ale under that head but we punters will be oblivious of it and I do doubt that anyone really knows the fundamental value of any stock or share.

I postulate that around 9 to 12% of the headline price is shaveable without disaster to the Exchange system

There have been many instances of the 'froth' being blown off the real beer, it happened in June 2013 when the DJI dropped 140 points in less than 100 milliseconds and back up just as rapidly a few seconds later.

That was the action of one Quant pressing the 'minimise' option on their bank of computers as he read that the President had been shot...

Dropping 20 or 30 points can be requested and then paid for... and it is, quite often in order to cull a tranche of bets that would cost too much to pay out.

The DJI is in that position at the moment.

The present drop is almost entirely artificial, as was much of the rise that made it possible.

But there has been a flurry of bottoming out bets placed (the market was going to rise) but to stop at that point would have cost too much, so the Algos have driven it down, taking huge sums all the way... all at will, no supply or demand dictated this rise and fall.

The rise (Phoenix like ) from this drop will be a matter of sleight of hand and the weekends are a huge help.

Events do sway and delay attaining the focal term point, this happened in Aug/Sept, way back in July the term was set as '16000' for the DJI over three jumps in September, starting pre-US trade on the 6th and over night on the 9th and finally last hour on the 13th.

It did still happen but the terminal number was not achieved due to the drop away (due to the various events in the World) prior to those dates, no matter the 'froth' of the latest Bernanke words has stoked the market sufficiently to allow this to happen in October.

But the setting of term points is not set in stone and is also not in the least bit concerned with the variables you mention at the time they are set, the Algorithms can (and do) achieve any 'number' for the index that has been chosen.

I can assure you, 17000 for the DJI before the end of this year is entirely possible if decided upon and it would not 'cost' a great deal either.

If it was decided upon then the rises would be achieved in the low input moments in the market, surprisingly despite the thousands of small/medium traders out there the market is filled with 'holes', these holes are where the market price can move up or down at very low cost indeed but the swarm of small 'establishment' bets gain without doing a thing, making real money every 1/5th of a second.

So 16000 is not something amazing to achieve this year, even with this faked 'up and down' we have seen of late the Algos could take it back to 16000 by Wednesday night/Thursday Morning.

If that was wanted then it would be the front-facing Quants job to assess whether it was too obvious that it is fakery, giving the game away too often undermines the income stream... and the 'Industry' doesn't want that at all.

new_trader said:

From what I have read, Mycroft Algoman is saying that the dastardly Algo's will always beat humans because we are weak and have emotions. All we need to do is teach machines how to love and we might have a chance.

Click to expand...

Nothing to do with weakness or the frailty of the human body or mind.

Just relentless percentage play with all the cards played face up...

Algorithms are brainless but overwhelmingly accurate percentage players.