The program trades

Does anyone else feel like program trades are responsible for half of the trading lately?

I'll probably get a bunch of shit for this, but it just seems to me that sometimes when the market slows down, all of a sudden all of my data times and sales get hit with buying and move up quickly, only to slow down and correct again.

Often on the days that the markets have seemed to go down on heavy volume(very few times), it seems like a light flurry of buy activity backs off the sellers and the markets just cruise back up and the selling can begin again.

I find is so strange. I wish I were a better trader to make money off of it but I'm not.

Anyone else notice it in heavier fashion lately?

 

That's not program trading. When you see a spike up followed by a spike down it's large trading houses using price discovery to decide what position to put on.

 

The inability to make a new high in the first hour should have been a sign of weakness.

 

I'm talking about across the board simultaneous spikes in stocks that are in different industries.

Maybe I'm wrong, but I've seen it a lot more recently and it piqued my attention.

While often the stocks trade at their own pace, I still see them sometimes get little bumps(sometimes not so little) in their action at the same time as other totally unrelated stocks.

 

Given that firms like Rennaissance Technologies do, on average, 4-7% of the volume on the NAS, yes it makes perfect sense.

What's your point?

 

Did I ask a question? Do you get it? Probably not.

 

I think his point is that prices often change too quickly and too randomly to be able to trade profitably. My advice to him is to stop trying to daytrade and take more of a swing trading perspective, or dare I say an investors perspective.

Even if you take a longer term perspective, prices will sometimes quickly go against you and you will have to take a loss. That's the nature of markets. Perhaps you should always be hedged (like covered calls for example) and accept limited upside profit for some limited downside protection.

 

There are people out there making money off of trends like that.

Those spikes appear random for the most part if you don't know what you are looking at....

 

algo's are making any kind of charting reading worthless.

 

Yeah, making money off that wasn't the original "point" of my question. I was just asking if anyone noticed those market-wide spurs of activity. It was a question...that's all.

Clearly there is money being made increasingly by computer-controlled systems or they wouldn't be being put in place. In 5 or 10 years when we get a tell-all about the shit that goes on behind closed doors to squeeze money out of the markets in ever more creative ways in the past few years I'd be surprised if they're something out of a scamsters handbook...it seems to me that the real money is being made with nothing but fog and mirrors and borrowed money.