dChan - Q Origins Project Archive

Anonymous ID: a3c5a0 April 30, 2022, 5:04 p.m. No.16185456 🗄️.is 🔗kun

tyb

High-Frequency Trading (HFT) and it's relevance to the metals markets-Spoofing

This is meant as an introduction to this subject, and only scratches the surface, for those who are not aware that the markets (all of them) are controlled by algorithmic 'bots. If you are a retail trader you are at a disadvantage from the start. What you see is already delayed by at least 10-12 seconds-no matter what (and this is also influenced by your location to the exchanges/data feeds which adds additional time via latency.) All of this is completely legal-but you can lower your risk by being aware of market conditions and educate yourself in technical analysis to assist in sidestepping the relentless wave of algorithms that dominate our markets. Hopefully you take some of this information and start researching it yourself as there is nowhere near the space to get into most of this in greater detail.

Basic description-High-frequency trading (HFT) is algorithmic trading characterized by high-speed trade execution, an extremely large number of transactions, and a very short-term investment horizon. HFT leverages special computers to achieve the highest speed of trade execution possible. It is very complex and, therefore, primarily a tool employed by large institutional investors such as investment banks and hedge funds. Complex algorithms that are used in high-frequency trading analyze individual stocks to spot emerging trends in milliseconds. It will result in hundreds of buy orders to be sent out in a matter of seconds, given the analysis finds a trigger.

Please visit this site

Ongoing Research - Market Events and Phenomena

http://www.nanex.net/FlashCrash/OngoingResearch.html

It details the Flash Crash event that occurred on May 6th, 2010 and does an excellent job of laying out the evidence as well as presenting visual proof of how the algos operate. It is old and stops at 2013 however it is still very relevant as the only real thing that has changed is the sophistication of the the algorithms and the speed of execution-that has changed quite a bit since these events are/were documented.

There is also an excellent book written by Michael Lewis, yes that Michael Lewis, called 'Flash Boys' and it details the rise of the HFT systems starting in 2006. Again the information is old but it does an excellent job of showing just what was habbening with it's main source from The Royal Bank of Canada that details the suspicious options activity via the bid/ask manipulation. I will add that I witnessed this very same manipulation as I would place an order to sell 10 options and my hard price was never filled because as soon as I entered it the price moved away-this is a lesson to NEVER use market orders EVER. I had to enter in an order to buy 1 option contract in order for it to move back to the price I wanted to sell for-so I sold 10 contracts but had to buy 1 to do it-and that did not last very long either-they figured that out quickly. They tested all this out in the options markets in 2005/6 before heavily introducing it across all markets. This is what the 'Flash Boys' book covers.

What needs to change with this is the fact that the big firms that do this (Virtu Financial is at the top of the heap here) get rebates back from the market makers for placing orders. They are incentivized them to constantly place orders because there is a kickback to them for doing so. You might have heard of 'spoofing'-specifically in the metals markets. This is when multiple orders get placed in the system with no intention of ever having them execute. The goal of spoofing is to move market prices in a way that financially benefits the trader’s preexisting positions in the market. They do this solely to influence price movement either up or down by having these orders seen on the order "book"-they are then quickly canceled. By consistently entering and then canceling orders they naturally have an influence on where the price of any asset may go. So you can open an order on the futures or options market to drive the price in a particular direction but when it gets close to filling you-or your algo. pull the order. This then tricks other market participants into thinking there is more depth in a particular direction that is not really there.

This can be easily solved by charging participants for placing orders-you also have to dis-incentivize the order placement as well. One of the biggest arenas for spoofing in the metals markets-specifically Ag. Deutsche Bank got caught for doing this but paid a fine and admitted nothing-in 2018, Deutsche Bank paid $30 million to settle with the U.S. Commodity Futures Trading Commission over alleged spoofing. The bank neither admitted nor denied the allegations. JP Morgue also did the same thing and one of it's traders was charged with RICO violations-fined (almost $1b-$920m) and they were actually banned from trading in it's proprietary (house account) so what did they do? see-this >>15945262 O.C.C Quarterly Derivatives Report Q4 2021-March25th, 2022 (Silver derivatives increases)

They continue to do so from it's house account as well-this is visible via the COMEX daily #s-specifically how many contracts and who "placed the trades". The contract size for Ag is 5000 ozs but there is a smaller physical component of it as well. Remember the Spot price movements reflect paper contracts being invented out of thin air and sold against an open market.

In 2010-2011 they did the opposite via the same strategy and drove the price higher and amassing a huge short position. I will add that I've never completely believed what they report because at times they "report" that millions of ozs. of silver have entered or exited the COMEX warehouse yet there seems to never be any empirical evidence of this actually habbening in that size-you'd think someone might have seen a truck or two entering or exiting that facility-especially when the paperwork that is produced say millions of ozs. There is also an element of the ETF's here which will be addressed in a later post (specifically that you own nothing with those-it is only a promissory note and has not real value when the shit hits the fan. You will be in a very LONG line with zero chance of actually taking physical delivery.

See here >>>/qrb/128880 for a little moar on Private Advisors Grp amassing a LARGE position in SLV which drove the price up last year only for them to quickly exit the position. The action at the start of this year mimics the same price movement from last year so I am willing to bet that they are doing the same thing as you've seen that the rise was "dealt" with in the same way this year as last. You can follow the links contained in that one link to find additional information. Reported in that is the Exchange for Physical-which is NOT a contract exchange for Physical metal even though it is called that with its acronym-An exchange for physical trade (EFP) is a privately negotiated and simultaneous exchange of a futures position for a cash position. There is no physical silver being traded with this it is simply a payoff for exit COMEX contracts so that they do not stand for delivery

They simply leased out Ag to Bank of America who, prior to the start of last year, had zero operations in the Ag COMEX markets, so they could continue to do the dirty work for the Morgue. They placed it of Bank of America because it is , like the others, a too-big-too-fail bank…and when the time comes the thinking is/was how can you not bail out Bank of America-so off it went to them.

This system operates in nano-seconds and you will never 'beat it" so you need to be aware you are always reacting to whatever they are doing-as well as the built in latency. So take some time and educate yourself properly to see how this is all legal, allowed and there is nothing you as an individual can do about it-you just have to understand you are always reacting

I also encourage you to visit this site as well-it goes into market capture and was started by Patrick Byrne.

Start here

Introduction to the Deep Capture Analysis (October 2007)

https://www.deepcapture.com/introduction-to-the-deep-capture-analysis/

It contains 9 chapters and well-worth the read if you have not done so already.

Whatever your opinion of Mr. Byrne is it should influence this portion of his information as this is solid and on point.

>>16185799

>$60T in debt of derivatives

Way moar that-that doesn't even cover the top two holders JP Morgan and Goldman Sachs

moar like$187T