Mysterious Alogrithm Was 4% of Trading Activity Last Week

[Parsad]

I've been warning about this for some time, but something bad is going to happen one day from the huge amount of volume HFT's are doing...almost guaranteed to create panic selling at some point in time...and then who knows what it will trigger on the derivative side with counterparty liability.  Cheers!

 

http://www.cnbc.com/id/49333454

[LC]

Is it wrong to hope so? I'd like some of my ridiculously cheap limit orders to be filled...

[CONeal]

But once these machines create a panic all they do is cancel the trades.  Kinda feels like heads they win, tails retail is not allowed to take advantage of it.

[Parsad]

But once these machines create a panic all they do is cancel the trades.  Kinda feels like heads they win, tails retail is not allowed to take advantage of it.

 

At some point, when you get significant panic selling in the ensuing rush after a large flash crash, you will not be able to cancel all of those trades.  Somebody is going to take a hit eventually (derivatives losses), and it won't be pretty. 

 

Markets in the short-term work on confidence and fear, and if you have fear for a prolonged period...such as after a flash crash were people become extremely risk averse...you could see widespread selling.  Cheers!