What happened to gold at 6:39EST (13 nov)?

Discussion in 'Commodity Futures' started by paperclip, Nov 13, 2006.

  1. Huge spike in gold (ZG/YG) at 6:39 EST that recovers by the next minute bar. After the S&P futures similar event one Sunday evening recently, I wonder if someone is 'gaming' the system and running the stops out of hours deliberately.

    Any rumours? Any opinions?

    I'm not complaining, and it's all part of freedom and open markets.
    But I am looking for more information. Does anyone have anything from the CBOT or a news article on this?
    Or maybe a personal experience to share?

    Soon it's going to be pointless holding protective stops overnight.
  2. The volume on ZG is real thin overnight so I wouldn't be surprised at the idea of stop running.
  3. Morning gold market report for 13 Nov on CBOT website:

    A lot of waffle and not one mention of a spike in the futures that caused an approx 5% move in value (that's a big day size, even in gold) in about _one minute_.
    Typical. The same way there was so little in the financial press (I only found a couple of short articles on the whole web) about that S&P spike back on Sun 22 Oct. (You know, the artificially created S&P spike that sticks out in a _massive_ way on anyone's daily chart.)

    Any information and/or links is much appreciated.

  4. this my friend is one of the problems of screen trading

    "hidden stops" were most likely triggered and those cascaded
    onto others ... like a pebble skimming a pond

    the reason why the markets bounced back so quickly
    is obvious ... the markets should not have gotten that
    low in the first place

    the CBOT needs to have better market makers with deeper
    pockets to provide better liquidity when needed
    I would have provided some liquidity myself
    but I was asleep at the time after trading some
    overnight into europe session

  5. Dammed if you do, dammed if you don't.

    Kind of similar to the situation portrayed in the Russell Crowe movie "A Good Year" where his team of traders pushed down the price of the bonds then bought them all back at lower prices. In the movie he makes $77 million dollars in a few minutes, but on a base of $5 billion - so that is only a daily percent profit of 1.5% - quite doable.

    I suspect this scenario in the movie was modelled off what Citibank did about 18 months ago and got royally hauled over the coals for it by every bank they screwed doing it - but they kept the money if memory serves.

    This ZG situation this morning stinks - I dodged it but could easily have been caught.
  6. CBOT reviewed this but decided to keep all ZG trades at 6:38/6:39 am for good.This is a rotating phenomenon in several markets and for sure this is very very suspicious. I am disappointed about the exchange not making use of the bust range ($4) and adjusting back all trades. When looking at other gold contracts trading around the same time frame it appears to be obvious that these CBOT trades were either an error or an illicit market activity. CBOT should by all means prohibit such rip-offs by more rigorously applying their trade error policies, but in this case they clearly failed to keep up a fair market principle.

    If all of us who are affected let these events pass by and just shrug the losses away, it will continue further here and there. The exchanges do not seem to have a sufficient incentive to protect us from this. Possibly only a credible threat of a substantial financial loss would change the attitude towards keeping fairness in overnight markets. So my conclusion is to take some legal action and I suggest that everyone should consider this. Would anybody like to join the case ?
  7. basis


    Can you substantiate ANYTHING that you just said?

    If you don't like playing with the big boys, don't. Fat fingers suck, but they're a part of the landscape.
  8. "Loss cut Stops" are usually anything but.

    Maybe a better play is to put Buy limits in. If you get filled on a AH Drop and Pop, and your trade is not busted, then $$$$$$$$$$$$!

    Good luck to all. :cool:
  9. From Oanda:
    "XAU/USD Spike Correction
    The XAU/USD price movement at approximately 06:39 EST this morning on both FXTrade and FXGame was due to incorrect pricing we received: it was a spike, and we are presently correcting any transactions which were incorrectly executed. The users of all effected accounts will receive e-mail when these corrections are complete."
  10. What is obvious needs not to be substantiated. Look at the 1min chart or at T&S and compare it with other gold contracts in the US and internationally. Basis, are you trying to distract here ? This shouldn´t become a "big-boys-eat-everybody-else-for-a-free-lunch-party". Market manipulation is a criminal act. And from what I hear there is actually an investigation already underway.
    But lets assume for a moment this is just a pure dull someone unpurposely launching a stop cascade avalanche. Yet, its the responsibilty of the exchanges to use at least best effort to prevent financial damage by such an event, especially to protect the smaller investors/traders. If they provide a public market for trading and get paid for it, they have an obligation to make it fair and secure as possible for everyone - period. There are now quite a few exchanges in the US and around the globe that have adopted this responibilty in their policies and won´t allow for damages by errors or misuse. And now look - OANDA is adjusting - showing it is not an impossible thing to ask for, and showing who is providing a fair market. The current CBOT case in the gold contracts however is a very unpleasant bad example on how not to deal with this - and now after the OANDA correction looking even worse. Basis, you are right in pointing out that manipulation, unfair trading practices and errors a part of the landscape, but that doesn´t mean we have to accept them as our fate.

    Once again, everybody who would like to join a legal action, send me an email or private message.
    Any legal comments, hints or advice from futures industry or legal professionals ?
    #10     Nov 13, 2006