4 ms·

Many criticisms of cryptocurrency of the form, "...has x fraudulent facet..." also apply to traditional finance. What is being called "wash trading" in this art

Many criticisms of cryptocurrency of the form, "...has x fraudulent facet..." also apply to traditional finance. What is being called "wash trading" in this article is called "algorithmic trading" on traditional asset exchanges, and is considered fair game/a bit funny (especially prior to the Jan 2022 decision to decimate all retirement portfolio growth due to QE). The way this is dealt with on traditional markets is to simply draw a line on what trading is reported for mark-to-market (i.e., bids and asks for under 100 shares don't appear in the quote tick data). Other reactive measures such as circuit breakers like those bumped up against in March 2020 established due to the 2010 "flash crash" have also been put in place in traditional markets. Forbes establishes a "proprietary" methodology to weight and attempt to sieve "real volume," which I can't agree or disagree with since it is opaque with regards to the precise implementation. Given the nature of their findings, I would call the title editorialized.

pxmpxm 4y ago
What you wrote is entirely incorrect. You cannot wash trade algorithmically any more than you could do by hand (as a matter of fact, virtually all exchanges have self trade prevention that will cancel your netting orders), and exchanges publish full book depth of market data, even IEX these days - the roundlot thing you allude to is a regulatory constructor from Reg NMS for protected quotes.
- meltyness 4y ago
  Then can you clarify on how hft/algotrading contributes meaningfully to market function?
rhodorhoades 4y ago
Yeah - it’s rather annoying how they lump in ‘non-economic activity’ with ‘wash-trading’. HFT is totally legitimate way of doing business, the liquidity is provides ‘may’ be good for markets and shouldn’t be lumped in with wash trading as “fraudulent” without any real analysis to back it up.

pxmpxm 4y ago

What you wrote is entirely incorrect. You cannot wash trade algorithmically any more than you could do by hand (as a matter of fact, virtually all exchanges have self trade prevention that will cancel your netting orders), and exchanges publish full book depth of market data, even IEX these days - the roundlot thing you allude to is a regulatory constructor from Reg NMS for protected quotes.

meltyness 4y ago
Then can you clarify on how hft/algotrading contributes meaningfully to market function?

rhodorhoades 4y ago

Yeah - it’s rather annoying how they lump in ‘non-economic activity’ with ‘wash-trading’. HFT is totally legitimate way of doing business, the liquidity is provides ‘may’ be good for markets and shouldn’t be lumped in with wash trading as “fraudulent” without any real analysis to back it up.