Mark McHugh

Arguing with a Wall Street Apologist

In Open Thread on Friday, July 30, 2010 at 8:50 pm

…and thus its people like you that deserve to be robbed of their $ in the markets.

~ Some Douche at Zerohedge.com

That’s cold-blooded, even by my standards, but this illustrates  perfectly Wall Street’s  elitist attitude toward the general population.  The attitude shouldn’t surprise anyone, but they don’t fuck up and actually say it very often.  You have to poke them with a stick a few times, laugh at their absurdity and poke them again.

I’m good at that stuff.   It’s a gift.

Wall Street’s bleeding again.  The faux rally that began last year hasn’t inspired real new money to flow their way.  Equity mutual fund flows have gone negative in 2010, meaning people are taking profits, profits that are supposed to pay for trader’s yachts.  Wall Street reform was Congress’ feeble attempt to convince you that everything’s on the up and up now.  Of course, no one in their right mind believes that.  So we are on the verge of seeing what happens when no one feeds the sharks.  This next crash will surely bring the end of Wall Street as we know it, and hopefully the rebirth of America.

Anyway, Wall Street is trying desperately to win back our hearts, minds, and most importantly, our cash.  They’re trying so hard to be nice and put all our very well-founded fears to rest.  That’s not easy for sociopaths.  They are only superficially charming and have difficulty keeping that shape under duress. 

From Themis Trading  via Zerohedge

 Yesterday, we had our fifth circuit breaker pop since the pilot program was announced.  This time the stock was CSCO and 7 trades of 100 shares priced between $24 and $26 caused the breaker to go off.

The focus of the article was on computers and programmers, as well as the “circuit breakers” put in since the May 6 “flash crash.”  It refers to the CSCO trades in question as “flawed.”  No shit.  When seven trades worth about 18,000 bucks causes a heavily traded issue’s market cap to jump 11,000,000,000, calling that a flaw is like calling the gulf spill an “oopsie.”

I assert that these trades were little more than the garden variety rape trades that retail investors  see all the time on market orders.  Personally, I’ve never been burned that bad (8% or so), but 3%, yeah that’s happened to me (not my “friend,” me).  When it happened to me, the trade never showed up on any chart.  I spent a half hour screaming at my broker, who assured me the price was legit, even though it wasn’t published.   The most unusual thing about CSCO yesterday is that someone actually noticed these trades, and halted CSCO for five minutes. 

The way I see it, Wall Street is so starved for real cash right now, they’ve got to rape every single retail customer they can, as much as they can get away with.  These “circuit breaker” events are them pushing the envelope too far.  Why these incidents aren’t getting “erased,” like mine did, I don’t know (maybe that’s a good sign).  I signed in to ZH and presented my case…..

Enter the Douche-bag

I present what followed here, partly because I’ve got an epic case of writer’s block.  Note that posts are not in true chronological order, because of how ZH’s blogging software works.  This is the most fun I’ve had writing since that tool from Microsoft showed up here.  I always enjoy a smackdown argument (this is known) but the way le douche morphs his/her arguments is just awesome.   I wish I could write dark comedy this good!

Here we go…
by mark mchugh
on Fri, 07/30/2010 – 10:03
#495948

 

I think maybe what’s being illustrated here is how little “real” investing is going on right now.

Allegedly, 37.5 million shares of CSCO traded yesterday, but 7 100 trades caused a hiccup?  Strip out computers trading against each other, mutual funds and other institutions adjusting positions…

How many shares now?

HFT is predatory.  That’s why it exists.  Looking to cheat the mutual funds and retail investors at every turn.  7 100 share trades popping a breaker should tell you how scarce a commodity rubes are becoming.

by mark mchugh
on Fri, 07/30/2010 – 10:16
#495994

Ironically this example also illustrates why retail investors left.  Does anyone out there know a retail investor who hasn’t gotten hosed by entering a market order?

I have personally received market order execution outside of tape (meaning well above the high for that minute) , and spent half an hour screaming at my broker to no avail.

And these douche-bags are wondering when the retail investor will be coming back?

How ’bout never?

by ZeroPower
on Fri, 07/30/2010 – 10:26
#496022

Unless youre holding a big block of XYZ and need to get rid of it ASAP i see absolutely no reason for anyone to ever enter a market order. 

How are you at all surprised that your execution was less than favorable if you basically told the machine to fill you at ANY price?

by mark mchugh
on Fri, 07/30/2010 – 10:46
#496078

“Market” price is not ANY price.

Because by definition the exchanges are required to maintain an orderly market, which means NOT spiking the price 3% the nano-second someone places an order.  What’s even worse is pretending that trade didn’t even happen later.

I’ve documented a few cases, but no one cares (including you). 

https://acrossthestreetnet.wordpress.com/2009/02/03/todays-wtf-gld-trades/

https://acrossthestreetnet.wordpress.com/2009/03/18/how-the-fuck-does-this-happen-mary/

BTW, I learned my lesson – You can’t trust a broker with a market order and you can’t trade quickly manually entering limits – soultion: don’t play.

by Pegasus Muse
on Fri, 07/30/2010 – 11:36
#496276

A self-directed account will solve most your problems.  Limit orders.  Appropriate stops.

Bank of America Investments has a self-directed account with 30 commission-free trades/mon for customers who maintain a $25K balance with BAC.

Other discount brokers have other low cost options.

by mark mchugh
on Fri, 07/30/2010 – 12:03
#496328

You misunderstand – this isn’t my problem, it’s the market’s problem.  I’m done with these clowns.

FYI – I have a self-directed account & use(d) limits.

You can get hosed with limit orders too, especially on the sell side.  If you look at the examples I posted, the hairs on the charts allow the machines to clean out every “appropriate stop” on the books.

So when I set a sell stop because I have to pee, there’s no guarantee my position won’t get stolen.  I can assure you my experience is not unique, but hey, Congress just declared the shark tank safe for swimming, so I should get set-up with BAC?

Can you hear yourself?

by fajensen
on Fri, 07/30/2010 – 14:33
#496689

“Bank of America” that would be the old DATEK … Google “Datek Online Brokerage Services LLC”, if you like and the people behind it, its a bit the same as “E&J Gallo Winery ” (who also makes Cisco ;-)!

If you use stops, you will be fucked over, traders make beer-money from losers who set stops – they set a small trade triggering your stop, scoop up your stocks and sell it at the market minutes later.

Limit orders will rarely execute, they will just sit there and sit there and sit there … even though the limit should have been hit. That will teach you to not use limits. Then you use Market and get fucked again

It’s just not worth “investing” via an American exchange/broker, IMO, I presently use Nordnet.

by mark mchugh
on Fri, 07/30/2010 – 15:42
#496863

True dat

by ZeroPower
on Fri, 07/30/2010 – 12:20
#496365

You should really research more into market microstructure and execution before making those blog posts which simply dont have all the facts. The GLD and the SPY posts are plain wrong.

These (usually block) orders that go through well above the ask/below the bid are usually dark pool transactions big players use. Many of those can also be late orders posting from the specialist where he accumulated shares over time. The block trade usually gets processed later than it was executed, which is why you see what you saw. They’re pretty much always broker interalized and there is simply no liquidity at that price so don’t question why the order went off when you had the exact same limit price on the book and didn’t get hit.

If you take a look at the 1min SPY, especially right around market close between 4-5pm, theres tons of those orders going off, simply because its such a common tool to hedge this. Also many times the orders that go off if you map on some technicals like VWAP will notice why they go through at a wierd place eg: 104.245 on a close of 106 but VWAP @ close was 104.25

I hope this helps you understand it a bit more. As much as the markets are a joke, here you were simply taking the trades out of context thinking a market price really executed that far away from NBBO.

by ZeroPower
on Fri, 07/30/2010 – 12:26
#496390

Pulled up TOS… here are some examples for you of SPY, all from last week:

http://a.imageshack.us/img525/4984/spyah.jpg

Like clockwork, there you have tons of extra long candles almost always occurring right after market close. Hope this illustrates it a bit more for you that there is nothing illegal about this as your blog claims. 

by mark mchugh
on Fri, 07/30/2010 – 17:32
#497140

And there you have the problem:

There’s nothing illegal about a $2500 market order moving an issue 5 Billion.

and

Triggering stops whenever it suits the system.

by mark mchugh
on Fri, 07/30/2010 – 18:07
#497190

I get it now; it’s not illegal because we do it all the time!

by mark mchugh
on Fri, 07/30/2010 – 12:49
#496460

Hahaha!

Let me get this straight? An hour ago, you were confused between market price and ANY price, now you’re a quant!

Those examples were from LIVE charts as they happened.  “Market microstrutre” my left nut.

by ZeroPower
on Fri, 07/30/2010 – 12:59
#496481

Not a quant. And not a failed blog poster either.

Please explain how i was confused between market and ANY price. When i write market price i dont expect the .00/.01 price to be executed at .50. However, it wouldnt be unreasonable for it to lift a few pennies higher on a spike. Hence ‘any’ price close to the b/a. Its unfortunate you misinterpreted what i meant to say.

As for your LIVE charts as you say… um… come again? Whether the chart i pulled up is from last year or its right in front of me while market is open, there is absolutely ZERO difference as long as youre using the same time period. You still didnt reply to a single one of my facts on your observations.

And yes, im sure its hard to grasp, but structure is indeed the backbone of the markets.

by mark mchugh
on Fri, 07/30/2010 – 13:10
#496513

We’re not talking penny stocks here, toots.  We’re talking highly liquid issues and we’re talking about trades that vanish from the record and you’re talking about “secret” trades that appear on it.

If you trust the “structure”, then why are market orders unsafe?

Answer: Because you’re an apologist.

by mark mchugh
on Fri, 07/30/2010 – 13:12
#496522

And I still like to think of myself as a failing blog poster, I’l have you know.

by ZeroPower
on Fri, 07/30/2010 – 16:43
#497048

Trades don’t simply vanish. I have trouble believing you got an order filled which wasn’t at all close (within a few pennies is reasonable) to the current b/a. And i highly doubt youre talking about a delayed print like you do in your posts on GLD and SPY.

I dont necessarily trust the current structure due to the markets needing individual circuit breakers ever since the May 6th fiasco, but i know retail folk do not simply get orders filled that arent printed. And nowhere did i ever mention a penny stock so i have no idea where youre coming from.

by mark mchugh
on Fri, 07/30/2010 – 17:34
#497143

Maybe this will ring a bell:

When i write market price i dont expect the .00/.01 price to be executed at .50.

by mark mchugh
on Fri, 07/30/2010 – 13:03
#496495

So some dark pool trades show up on the tape, and some retail trades (like mine) never-ever do.

crazy world. crazy world.

by ZeroPower
on Fri, 07/30/2010 – 13:13
#496523

DP trades don’t even have to show up on the tape – thats the only real argument here if you were to have one. (Though, not to be confusing, it who’s DP youre using. I’ve been told Sigma-X is ‘at their discretion’ whereas RBC Dark trades always print).

As for retail, they all do. You just wont notice it when trading a liquid stock as your 100shares going through will be cluttered with the hundreds of other orders going through at the exact same time and price.

by mark mchugh
on Fri, 07/30/2010 – 15:01
#496745

Wrong again,

The real argument here is how 7 (obviously retail) trades worth about 2,500 bucks apiece managed to move Cisco’s market cap 11 Billion Dollars, and you’re saying I don’t understand “market structure.”  You did get that much straight.  Nice backbone you’ve got there.

I’m telling you, God as my witness, I’ve been executed at a price that never showed up on the tape (ever), and apparently you don’t believe me.

Thanks for straightening me and all the other retail investors out.  I now see that we haven’t been getting fucked, we’re just dumb.  We’ll be back Monday, so swing by Starbucks, pick up a traveler….

…and wait for us.

by ZeroPower
on Fri, 07/30/2010 – 16:59
#497087

Why obviously retail? Did you take a look at the NASDAQ TRF to verify? Do you know which PB executed the trade? Is it because you think the big boys don’t do 100 lot sizes? Are you one that thinks retail size=100 and institutions only deal in >1MM blocks?

Honestly there is no point in trying to have a conversation here as you simply have a close-minded view on how you got ‘robbed’ of my guess $20 and are here bitching about it. What do you use for stock research, YAHOO? Thats great… if you’re 19.  And no you don’t understand anything about market structure – i wasn’t criticizing you for it at first but your replies show just how arrogant one can be, and thus its people like you that deserve to be robbed of their $ in the markets.

Id suggest you stick with your GLD or 2/20 fund. At least in the MF you won’t be bitching about above/below prints which have absolutely ZERO to do with your current position.

by mark mchugh
on Fri, 07/30/2010 – 17:43
#497164

Again, you completely miss the point.

The size of the order screams retail, why you would think otherwise is beyond me.  Raping retail traders is Wall Street’s bread and butter.  Yesterday they tripped an alarm, and got caught on video, so to speak.

“Nothing to see hear, folks! move along, move along.”

by mark mchugh
on Fri, 07/30/2010 – 17:49
#497171

These are exactly the kind of trades that “vanish” from the tape.  Why these ones didn’t, I can’t explain, but I’ll bet if they had it to do over again, they would.

 

 

  1. wow, that was fun to read.

    so, “big boys” trade in 100 share blocks for…what, exactly?

    and it’s ok of some DP trades “print” and others don’t and maybe this affects your stops or whatever (you shmuck) but it’s no big deal?

    interesting.

  2. oh. i should have kept reading. zerobrainpower says the 100 blocks are from HF traders (like, duh) and that’s why 7 100 trades could blow the circuit breaker. so clearly none of this is problematic because…?

    oh, and DP/hidden trades don’t affect the b/a??? is zeroconscience sure of that fact? does mary schapiro know this for a fact?

  3. Yeah, it was fun, but the fact that he called me a liar is still stuck in my teeth….

  4. Yeah, but you called him toots… so you guys are square.

    Glad you got to play at something.

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