Predatory Trading System Invented Yes - There is a new way to trade the markets. I once proved the point that you could use one source of data at one exchange to trade yet another market at a second exchange. Namely that you could use the advancing issues on the NYSE to trade the SP futures on the CME. Now I have discovered that you do not even need to trade a market data such as the SP futures. I simply invented a predatory system that is designed to take advantage of less sophisticated trading models being used in the majority of transactions today. It is much simpler to trade and be successful against other models whose actions are predictable than it is to trade against raw market price action. This is a huge step in the advancement of trading the markets and is the future of trading successfully. This will make all books, analysis, guru's, software, and all trading knowledge as we know it totally obsolete. This method is simple to implement and use and as dependable as the unwillingness to change as is human nature. Discovery of the prey is the only difficult thing about it. Once recognized it's easy to capture and capitalize upon it. Mark Brown
Good to have you back in the game Mark, as a lurker on many of the sites you haunt, I always enjoyed your material. I would say this is inevitable right? Systematic trading means that it becomes more likely for someone to identify intent by reverse engineering the actions of said system, which is easier to identify since it is completely systematic to begin with. I'm quite curious to see what you have to say on this topic, but my own thoughts have been to go after brokers who may be using fairly unsophisticated systems/algorithms to move large orders.
Interesting... What kind of methods do you use to identify the various types of market participants? I know from experience it is a difficult task. Ninna
Interesting idea. How do you make sure this is not illegal? The way you state this it may be borderline legal. This is what it seems they have done the two Norwegian traders who we convicted http://www.futuresmag.com/News/2010/10/Pages/Norwegian-traders-convicted-for-manipulation.aspx
Identifying systematic trading stops is all well and good, but exploiting those stops will just end with the system being pulled (and I doubt any big money is stupid enough to trade with that type of vulnerability). Other systems either cut such thin margins that attempting to 'front run' them is not a reasonable approach, or are designed to only accept specific prices they want based on price action, and unless you figured out a way to manipulate price action consistently, those systems will always get their own pound of flesh based on the liquidity they catch.
Make your money in a hurry, because the counterparties will not allow you to pick them off indefinitely. It would be rather simple for an ATS manager to see that he's getting gamed in lower volume names and to adjust accordingly. In fact, if they were feeling frisky and vindictive they could in turn flip you - and in a low volume name the 'pissed-off' deep pockets will win the day and the battle. The other point to consider is counterparty identification - if you are identifying unfilled and working orders from a specific counterparty by an exchange-created ECN tag there will certainly be exchange compliance issues and possibly regulatory concerns. Even for your own filled trades - depending upon the exchange, there might be compliance issues with a third party (you) knowing the specific identification of your own filled order counterparty. There is something to be learned from the aggressive enforcement actions taken by TH and the Norwegian regulators.
i have actually manipulated price action successfully in the past at one time i had over a millon people following a system that i published trades hourly. it dawned on me one day when someone asked the question which changed my life. that question was - do you know in advance what the trade will be prior to posting it? then i got it. i became a vampire trader taking what i needed but not killing my prey. this only works if you help others cumulatively make more money than you take so everyone can survive. help others and you help yourself. now consider that most everyone can not come up with one successful method to give away let alone create a parallel system that feeds off it. there are many institutions using systems i have written and so nothing will change unless they stop making money so who cares. it is much easier to trade a system against a well working system then it is to trade against the market. large institutions are like a goose and i am a hummingbird. m