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The futures market is notorious for things that are definitely illegal in other financial markets (e.g. the stock market), and every so often you will see news

The futures market is notorious for things that are definitely illegal in other financial markets (e.g. the stock market), and every so often you will see news about the CFTC prosecuting someone for market manipulation. Banning onion futures only served as a reminder to everyone that the most extreme forms of bad behavior will not be tolerated, but plenty of less extreme but equally bad behavior is pretty pervasive. Algorithmic trading in the overnight market is rife with malicious tactics (bots try to discover and exploit stop orders, and in some cases bots are just trying to "trick" other bots).

quickthrowman 7y ago
> Algorithmic trading in the overnight market is rife with malicious tactics (bots try to discover and exploit stop orders, and in some cases bots are just trying to "trick" other bots). What makes this malicious? Stop orders are just another source of liquidity, and they aren’t required. Don’t place your stop order in an obvious location, like right outside the local minima/maxima. Orders are allowed to be canceled or adjusted, I probably cancel 5-6 orders for every fill when I’m trading, algos are just faster. Keep in mind that when price moves, it may not be obvious to you why it did because there are participants with much better info than you that are faster as well.
- betterunix2 7y ago
  I think it is a bit malicious since there is no price discovery happening (and price discovery is the primary purpose of a market) and the trades are not based on any information at all, but we can disagree on what to call it. I do agree on the difficulty of knowing why prices move and the fact that other participants may have some knowledge I do not, and would even argue that it is probably more pronounced in the commodities market than the stock market because of insider trading rules and disclosure requirements.

quickthrowman 7y ago

> Algorithmic trading in the overnight market is rife with malicious tactics (bots try to discover and exploit stop orders, and in some cases bots are just trying to "trick" other bots). What makes this malicious? Stop orders are just another source of liquidity, and they aren’t required. Don’t place your stop order in an obvious location, like right outside the local minima/maxima. Orders are allowed to be canceled or adjusted, I probably cancel 5-6 orders for every fill when I’m trading, algos are just faster. Keep in mind that when price moves, it may not be obvious to you why it did because there are participants with much better info than you that are faster as well.

betterunix2 7y ago
I think it is a bit malicious since there is no price discovery happening (and price discovery is the primary purpose of a market) and the trades are not based on any information at all, but we can disagree on what to call it. I do agree on the difficulty of knowing why prices move and the fact that other participants may have some knowledge I do not, and would even argue that it is probably more pronounced in the commodities market than the stock market because of insider trading rules and disclosure requirements.