Rigged software... & Selling Order Flow

Discussion in 'Trading' started by limitdown, Nov 14, 2002.

  1. Ever feel that you're executions were being bettered by the head trader at your office? Ever feel that somehow, your expected outcome was being spoiled by another trader that either capped your gain or shorted ahead of your order flow (not once, but consistently)?

    Selling order flow is a term that suggests that the netted trades are steered to an ECN that provides soft dollar kick backs, however, it also has another connotation, where in the netted orders are observed on a supervisory level and traded against.

    Ever wonder about those two scenarios or have comments on these? I've heard rumoring about these events, which almost can not be proved, but have been suspected as occurring quite frequently.
  2. The only protection you have against such tactics is demanding IMMEDIATE, as in instant fills. Any ECN or Soes trade should print in less than a second. No one is going to trade against you in that timeframe (assuming you are using limit orders).

    NYSE or AMEX routed orders are a little harder to protect.
  3. Is it like conspiracy week on elite trader or something.

    limitdown, are you talking about size orders here that go through a trading desk or just he 2-3K lots most guys here probably swing around.

  4. :D
  5. John Q Public

    John Q Public Guest

    I can't say that I have experienced any of the above, but sometimes someone (or something) comes into my kitchen and drinks out of the milk bottle in my refrigerator. And he/she/it also changes stations on my radio.

    So while I have not had the problems you have, I still know what you mean.
  6. actually, I haven't had these problems, however, I have heard of them existing.

    conspiricy theory, reality or just 2k-3k swing traders/scalpers, could be all the above or a combination of the above.

    I'll give you an example of a software oversight, we will call it.

    In the position monitor, one can select all positions with or without active shares (long or short). Say that you have a $500 real time gain on 8 closed positions, and have 4 remaining active positions. Choose to exclude all entries without active positions/shares (whether long or short) and the realtime totals of profit and loss resets to just those displayed positions. Perhaps those active positions (4) has a real time loss, then your totals only show that $100 loss, thus ignoring the overall $500 gain. What the real time totals should show is an overall $400 gain. Software bug, oversight or intentional? You choose.

    Magnify that scenario on a supervisory level responsible for Risk Management, who also trades in his/her account. Now suppose he/she shows all active positions of all traders in his/her zone and their real time P&L, thus ignoring all their trades for the day/being carried. These totals are vastly different on a firm wide or region wide basis. Hence who's benefit does this serve? Does a hook like this, or a software bug (for non conspiricy theorists) allow for other "rigged" scenarios. One scenario a trader alluded to was the case of being able to see netted trades for his office and either trade (in size) in front of it, or short against it, thus ruining their combined expected outcome.

    For example, say that Dell released its earnings last night (which it did) and you were able to see that office or firm wide there were net 50,000 Long at average price 30.75, whilest its trending towards 30.90. One could definetly act upon such knowledge, given the source of the trades.
  7. Gordon Gecko just posted a thread regarding how he can never win.

    He participates quite heavily on this board, and we are all the better for his bringing to the fore these issues and common concerns that others have not voiced.

    GG, take a look at this thread, and quantify your trading success/failures in these terms and add to this thread.


    PS. you might find some answers in the process
  8. I'm a new trader, and always wonders why I always here people gripping that they can never win over a longer period of time. Is there really something to this rigged software thing?
  9. in one office, the net (combined) longs on TXU were 22,500 shares at average price of, say 40.

    knowing that allows one to hedge, spread against, short or sell into that artificial demand.

    that's an overly simplified example, but exposes the supervisory capability that already exists from the head traders' desk.

    now take that same scenario one step further to those working at the software company, or clearing firm, and now exposing that position holding, or simply the book to others or benefiting from it.

    more than once a few traders have expressed the notion that they simply couldn't win, and that's in deferrence to their superior skillsets.
  10. :D :D :D
    #10     Jan 16, 2003