Mysterious HFT Algorithm Accounted for 4% of Stock Trading Last Week

Posted on Oct 10, 2012 in Economic News, Federal Reserve & Bankers

Kevin Hayden – TruthisTreason.net

Source: CNBC

A single mysterious computer program that placed orders — and then subsequently canceled them — made up 4 percent of all quote traffic in the U.S. stock market last week, according to the top tracker of high-frequency trading activity. The motive of the algorithm is still unclear.

The program placed orders in 25-millisecond bursts involving about 500 stocks, according to Nanex, a market data firm. The algorithm never executed a single trade, and it abruptly ended at about 10:30 a.m. Friday.

Hayden’s Note:

I hadn’t posted about high frequency trading, or HFT, in quite some time, so for those of you who have never heard of this flat-out manipulation, check out these articles:

“High Frequency Trading ‘Crop Circle’ Crime Scene”

Fed Asks for Closed Courtroom to Protect Goldman Sachs High Frequency Trading Scheme

70% of All Stock Trades Held for Average of 11 Seconds (HFT) & Fed Plans to Pump Half Trillion $ into Economy

JP Morgan, Chase, HSBC Accused of Silver Futures Manipulation…Again.

“Just goes to show you how just one person can have such an outsized impact on the market,” said Eric Hunsader, head of Nanex and the No. 1 detector of trading anomalies watching Wall Street today. “Exchanges are just not monitoring it.”

Hunsader’s sonar picked up that this was a single high-frequency trader after seeing the program’s pattern (200 fake quotes, then 400, then 1,000) repeated over and over. Also, it was being routed from the same place, the Nasdaq.

“My guess is that the algo was testing the market, as high-frequency frequently does,” says Jon Najarian, co-founder of TradeMonster.com. “As soon as they add bandwidth, the HFT crowd sees how quickly they can top out to create latency.”

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