28 May, 2017

There are bots. Look around.

There are bots. Look around.: "One example is quote stuffing, which involves flooding specific instruments (like a particular stock) with thousands and thousands of orders and cancellations at rates that exceed bandwidth capabilities. The goal is to increase latency and cause confusion among other participants in the market. Another example is spoofing, placing bids and offers with the intent to cancel rather than execute, and its advanced form, layering, where this is done at several pricing tiers to create the illusion of a fuller order book (in other words, faking supply and/or demand). The goals of these strategies is to entice other market participants — including other algorithms — to respond in a way that benefits the person running the manipulation strategy. People are creative. And in the early days of HFT, slimy people could do bad things with relative ease.


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