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A large investment bank Knight Trading would queue orders after the market closes, and then in the morning they had software that would insert their own buy/sel
by jijji 8y ago
A large investment bank Knight Trading would queue orders after the market closes, and then in the morning they had software that would insert their own buy/sell orders based on what was sitting in the queue from the previous night. Doing this they were guaranteed to make a certain amount of profit every day, and from what I was told it was perfectly legal.
- fnord123 8y agoKnight was a market maker, not an investment bank.
- trickstra 8y agodoes that make it ok?
- fnord123 8y agoA market maker's job is to have orders sitting on the book to provide liquidity to the market.
- trickstra 8y agosure.. but does that mean it's ok if they stuff them with their own orders in a way nobody else can and that gives them guaranteed profit at the expense of others?
- fnord123 8y agoIt does. And exchanges and other venues are continually updating to prevent market micro-structure from being able to be easily exploited.
- WalterBright 8y agoI never put in trades to be executed at the next opening. One always gets an adverse price that way.
- dondawest 8y agoIs that superstition or is there a logical basis to that strategy?
- auntienomen 8y agoWhoever told you this was yanking your chain. US equity markets (which is where Knight traded) don't close overnight. Trading volumes get thin, but trades can occur at any time of night. You can't just put an order down and wait till morning.