You mean that you trade against them when they're wrong about the price? That would sure put a hole in all these regulators' "non bono fide orders" line.
There are less and less spoofers in the markets (i trade futures so can't speak for stock traders). Spoofers don't make nearly as much money now because so many people know how to spot them and profit from them. Plus the risk of getting busted by the authorities. I think it should be legal, if they post fake size in the market they are at risk of getting filled. And I have seen them get filled and then you can see them scramble for the exits. If they want to play that game fine by me. I think iceberg orders (which are perfectly legal) and just as manipulative. If someone posts a 1 lot in the market but secretly wants to get filled on 500 of them how is that transparent. I try and get filled where the spoofer is secretly trying to get filled
JTrader to be honest it is easier to show than explain. You are looking for the "flip" when they pull the fake orders. Its not hard to spot large size in the order book. The key is seeing whether it actually wants to get any fills. If it pull as soon as a couple of contracts trade in to it its usually fake and will trade accordingly
Even less spoofing in stocks. Those that claim to see it are dreaming. 99% of the size I see gets filled. None of these clowns here actually trade, they wait for the postman to being the ssi checks.
Hi Tommo, For the last 2 weeks I have been watching the DoM and T&S for the Bund. It is as you say so easy to see the spoofers but the guys I'm seeing are normally a few prices down from the BBBO. Last friday I was taping the Bund action but my Camtasia screwed up and I lost the lot. It would have been quite interesting to review because at one point there was a guy running a 1000 contracts up and down the bid side which also at one point was at the bid and I think a small part of the order was executed. I don't think it was a coincidence but when this spoofer showed up on the bid we formed a bottom and started to rally back towards the highs. It was so obvious it was ridiculous to watch and stuck out from the normal tape like a sore thumb! My presumption to this activity was he may have been trying to push the price up into a sell order before removing the spoof and profiting when the price drops away??? Could you clarify this. If he was attempting to do this and managed to get a short order filled he must have got burned. Could you add your own opinion to what might have been going on?
Hi Redbaron, If he really was a spoofer and not just a large order hoping to tempt someone into filling him then by showing it on the bid side he would have been accumulating a short position that would have realised profit when the order was pulled. You don't need to expect huge reversals. 1000 lots is not particularly big in the bund most of the time spoofers are only looking for a couple of ticks profit. The best setups are when they put the fake size on the best bid or offer, when they put it a few prices away they tend to be wannabe spoofers that are so worried about getting filled on their order they hide it further down the book. The upside for them is they are less likely to get filled, but also less likely to bully the market effectively. I've actually put together a website selling videos of me showing how I trade them. But worry about listing it on here as I don't know if it is allowed. But if you're interested just send me a PM and will show you the link.
I may have located the video and will edit and try to upload to youtube for viewing tonight. I have also pm'd.
Hey Redbaron, Nice one, spotting them is half the battle, the bund spoofers aren't the easiest to trade in my opinion. Personally I prefer them in the thinner faster markets, I make decent money in the Dax (but its a pretty beefy contract unless you have some decent capital behind you). I've replied to your email. If you want me to have a look over your trades I don't mind, feel free to get in touch.