I've also been made aware of this place in the "desert" that allows similar types of speculation. I'll check into it and get back with you.
Adam
· 5 months ago
sure, let me know, sounds fishy.
MutantDog
· 5 months ago
"it's not even a level playing field" - says a former market-maker, so you know he knows the truth of that. lol.
Lots of whining out there re: HFT, aka algo trading. I've looked into it (shallowly - I read the Themis Trading stuff (see their web site)), and I only have three quibbles with it. One, "dark pools" are wrong, two, "flash" order are wrong - all business should be exposed to the market, in a timely manner. (SOES was also wrong, and abused - but at least the "little guy" got his licks in !) Third, "payment for order flow" is wrong, always. And, if you take out those factors, a lot of HFT goes away.
I want to agree with the opinion that all comers should be allowed to trade commodities - myself included. To me, emotionally, it's like an extension of my second Amendment rights - I have the right to defend myself (from rising oil prices, for example). Leading to the absurdist bumper-sticker, "You can have my January /NG when you pry it from my cold, dead, fingers". That said, the size of positions taken are a legit concern.
ps, thx for the dispersion trade discussion; as you say, if you don't have bolshoi margin, it's not something you'd contemplate, normally (and I don't).
Adam
· 5 months ago
yes re dispersion, you really can't get a big enough position and/or have the time to tend it unless you're at least an MM. And even there, it's really for specialist books and derivatives desks. It's an important concept though as the pricing of everything is all intertwined.
On the fronting/speculating or whatever, it just feels like a waste of time and energy to whine. Been off the floor for almost 8 years now, but I imagine many things are the same, just with better technology. As an MM, not a day goes by where someone doesn't pick you off right before a big order hits the stock and you have trouble hedging. Yes, it's totally wrong, but it's literally never penalized. You can and do complain about egregious violations, but at the same time, you're rarely if ever going to get compensated for the bad trade they hit you with. The most important thing to do is move on and be ready for the next trade. You have to learn to live with the fact there are bigger fish then you and try to make money anyway. In a perfect world they'd take the front running trade off the tape and punish the violator. But it's not a perfect world, it never happens that way.
Procol
· 5 months ago
Yes, but if they punished the floor for its violations, the floor would be a ghost town.
Adam
· 5 months ago
well, they are kind of ghost towns now, but that's a bit of a misconception. There's always big fish eating the smaller fish. Floor members are bigger fish than retail players, but they're not order initiators. If someone's front running it's an order initiator, ie. GS, Morgan, et. al. and like in every other realm of the biz, they're never reprimanded for it.
TenDollarTommy
· 5 months ago
Here's Kudlow, along with an incredible panel of useless talkers from the 90's..... time to flip to Bloomberg.
Adam
· 5 months ago
Kudlow? Useless? No way.
Anon#2
· 5 months ago
Interesting ... The IEA (International Energy Agency) agreed with the original position. That it was more with the fundamentals and speculators possibly adding to order of magnitude a bit, or to the volatility.
They cited that raw materials that DID NOT trade on futures exchanges (like cast iron) actually went up MORE on a percentage basis than many of the exchange traded raw materials getting the headlines. As far as I know, they is no "arbitrage" between cast iron and exchange traded metals like copper, gold or silver.
The shipping rates for dry bulk (i.e., non-petroleum cargoes) went parabolic during the same period as well.
I guess this was all orchestrated by .... "THEM" ...
Maybe some of us should get together and form a hedge fund, just so we can name it "THEM." And a "sister fund," which will be named "THEY."
"We cannot let "THEM" get away with this again."
"Uh oh, "THEY" are determined to move crude oil prices to $200/bbl. ... Uh oh ... "
Anon#2
· 5 months ago
oops ... ... "they is no arbitrage" s/b "there is no arbitrage"
Adam
· 5 months ago
Clearly THEY are responsible in that case, lol.
Procol
· 5 months ago
The markets are 99% casino, 1% asset allocation.
If you don't believe that , you're in the wrong business.
PS I mentioned the 50% fib retrace level the other day, and so far thats stopped the rally. The bots are partial to the teachings of dead mathematicians
Adam
· 5 months ago
99.9% probably, lol.
betheball
· 5 months ago
My father was a smoker. The day he quit smoking, he became the biggest jerk towards smokers of anyone.
That's my analogy for Cramer the trader vs. Cramer the former trader
On a different note:
There is a big difference between allowing manipulation to create inefficient pricing in the stock market vs. the commodity market. If GOOG goes to $2000, and then back to $50 on its way to a true price of $400, the only ones hurt are those who made the decision to play the game. If oil goes to $140, and then back to $30 on the way to its true price of $60, people who care nothing of the markets are harmed by this action.
Obviously, to blame the traders is completely asinine. The vehicles were there, no rules were broken. Like you said, its the a$$es who brought these vehicles to market who are the bad guys in this deal.
Procol
· 5 months ago
So your father wised up and that made him a jerk?
imo you can't bust the chops of smokers enough. The only jerks are the ones that say you have a 'right' to smoke. Don't be one.
your oil analogy is not much better. If someone takes a glock and sprays a school with it, does the blame fall on the gunmaker?
Adam
· 5 months ago
not sure shooting up a school and buying up oil contracts are that analogous. I think it's a legit point that there's more impact f***ing with oil markets than GOOG. BUT how do you actually define manipulating the market here? Did someone buy it with the express intent of causing the pop? That's a really tough thing to prove. My point isn't so much whether you can prove it or not, it's that for our purposes, this is an after-the-fact waste of time. Unless you're Cramer of course as he loves to blame everything bad on something simple.
TenDollarTommy
· 5 months ago
Oil is indeed a critical commodity and a very slippery topic. My first job was in a Dutch oil trading company back during the Arab embargo of '73-74. That's ARAB EMBARGO, so how did the U.S. import more oil/product during that time than pre-embargo? (check the numbers if you don't beleive me). There wasn't a drop of storage on the East coast and the price rose from 2.50-3.00 to around 10.00. The gov't of course intervened and caused the distribution crisis, as there never was any physical shortage. Sound vaguely familiar? As long as the guys moving the stuff make more than the clowns supervising the activity, traders will always find a way to circumnvent the rules to make a bigger profit. Sad, but true, Gordon Gekko trumps the Pope on the 'greed thing'.
Adam
· 5 months ago
that's a very good point, it's almost akin to performance enhancing drugs in sports. No matter what or when, there will always be a subset who will try to game the system. And you'll go broke waiting for the refs to stop them
betheball
· 5 months ago
Jesus, no offense but its like talking to myself here sometimes. Everyone is so eager to spout there pithy comments they don't read the actual post.
Who cares what there intent was?!?!?!
The point is, the manipulation would have been much less severe or volatile or wahtever you want to call it if these etfs and leveraged etfs weren't out there.
Adam
· 5 months ago
no question. Which is of course why they keep adding more. Unreal.
There's like a common sense factor here too. You're not going to do away with standard futures, but they should have forseen that having ETF's like UNG and USO structured as they were, it could make a joke out of the concept of position limits. Not to mention also having 2x and 3x products.
MutantDog
· 5 months ago
A couple things. First, on "people who care nothing for markets" - assuming here that said persons use petroleum-based products, said persons ARE in the market. Ignorance is no excuse; any farmer could tell said persons that you have to hedge your costs, and market your outputs correctly, or you're busted. (following the ag futures is known as "marketing" in farm country. That is one tough business, farming.)
Second - the "TRUE" price of oil ? There can be no such animal. You've got daily variation of supply, and demand; not to mention seasonality.
@procol. I do assert that right. Or do I have the right to tell you your business ? No offense.
Adam
· 5 months ago
you're wrong on that, there's always a true price of oil and Cramer promises to find it for you right here on Mad Money.
.....OK seriously, I'm totally of the belief that fhe "fair" price for anything is the price I see on the screen.
betheball
· 5 months ago
ok, fair price a poor choice of words.
otherwise, you totally missed my point...the single mother of three who commutes to work "could care nothing for markets" and most certainly was impacted by $140 oil.
In the BS world of male-dominated, narrow viewpointed online traders we tend to forget that the majority of humanity lives paycheck to paycheck at best. (Spoken as a narrow minded male trader myself)
Adam
· 5 months ago
Well, I did understand what you were saying and think it's good point that incorrect oil markets have greater impact than incorrect GOOG markets. Whatever correct may be. I was just saying that for trading purposes, fair is what's on the screen.
MutantDog
· 5 months ago
No, I do hear ya. I'm saying, if you use a thousand gallons of gasoline a year, and you can live with $2.55, lock it in. Single mom or not.
Most people don't think about it, but we're all in some market (buying and selling), all the time.
Brendan
· 5 months ago
"that were once dominated by producers and consumers who sought to hedge against oil-market volatility.
Gotta love that line. When are they talking about, the 19th century?
Adam
· 5 months ago
yeah, that's a bit of a joke. What exactly is the theory here, open markets are good unless someone uses them?
All Comments
Lots of whining out there re: HFT, aka algo trading. I've looked into it (shallowly - I read the Themis Trading stuff (see their web site)), and I only have three quibbles with it. One, "dark pools" are wrong, two, "flash" order are wrong - all business should be exposed to the market, in a timely manner. (SOES was also wrong, and abused - but at least the "little guy" got his licks in !) Third, "payment for order flow" is wrong, always. And, if you take out those factors, a lot of HFT goes away.
I want to agree with the opinion that all comers should be allowed to trade commodities - myself included. To me, emotionally, it's like an extension of my second Amendment rights - I have the right to defend myself (from rising oil prices, for example). Leading to the absurdist bumper-sticker, "You can have my January /NG when you pry it from my cold, dead, fingers". That said, the size of positions taken are a legit concern.
ps, thx for the dispersion trade discussion; as you say, if you don't have bolshoi margin, it's not something you'd contemplate, normally (and I don't).
On the fronting/speculating or whatever, it just feels like a waste of time and energy to whine. Been off the floor for almost 8 years now, but I imagine many things are the same, just with better technology. As an MM, not a day goes by where someone doesn't pick you off right before a big order hits the stock and you have trouble hedging. Yes, it's totally wrong, but it's literally never penalized. You can and do complain about egregious violations, but at the same time, you're rarely if ever going to get compensated for the bad trade they hit you with. The most important thing to do is move on and be ready for the next trade. You have to learn to live with the fact there are bigger fish then you and try to make money anyway. In a perfect world they'd take the front running trade off the tape and punish the violator. But it's not a perfect world, it never happens that way.
They cited that raw materials that DID NOT trade on futures exchanges (like cast iron) actually went up MORE on a percentage basis than many of the exchange traded raw materials getting the headlines. As far as I know, they is no "arbitrage" between cast iron and exchange traded metals like copper, gold or silver.
The shipping rates for dry bulk (i.e., non-petroleum cargoes) went parabolic during the same period as well.
I guess this was all orchestrated by .... "THEM" ...
Maybe some of us should get together and form a hedge fund, just so we can name it "THEM." And a "sister fund," which will be named "THEY."
"We cannot let "THEM" get away with this again."
"Uh oh, "THEY" are determined to move crude oil prices to $200/bbl. ... Uh oh ... "
If you don't believe that , you're in the wrong business.
PS I mentioned the 50% fib retrace level the other day, and so far thats stopped the rally. The bots are partial to the teachings of dead mathematicians
That's my analogy for Cramer the trader vs. Cramer the former trader
On a different note:
There is a big difference between allowing manipulation to create inefficient pricing in the stock market vs. the commodity market. If GOOG goes to $2000, and then back to $50 on its way to a true price of $400, the only ones hurt are those who made the decision to play the game. If oil goes to $140, and then back to $30 on the way to its true price of $60, people who care nothing of the markets are harmed by this action.
Obviously, to blame the traders is completely asinine. The vehicles were there, no rules were broken. Like you said, its the a$$es who brought these vehicles to market who are the bad guys in this deal.
imo you can't bust the chops of smokers enough. The only jerks are the ones that say you have a 'right' to smoke. Don't be one.
your oil analogy is not much better. If someone takes a glock and sprays a school with it, does the blame fall on the gunmaker?
Who cares what there intent was?!?!?!
The point is, the manipulation would have been much less severe or volatile or wahtever you want to call it if these etfs and leveraged etfs weren't out there.
There's like a common sense factor here too. You're not going to do away with standard futures, but they should have forseen that having ETF's like UNG and USO structured as they were, it could make a joke out of the concept of position limits. Not to mention also having 2x and 3x products.
Second - the "TRUE" price of oil ? There can be no such animal. You've got daily variation of supply, and demand; not to mention seasonality.
@procol. I do assert that right. Or do I have the right to tell you your business ? No offense.
.....OK seriously, I'm totally of the belief that fhe "fair" price for anything is the price I see on the screen.
otherwise, you totally missed my point...the single mother of three who commutes to work "could care nothing for markets" and most certainly was impacted by $140 oil.
In the BS world of male-dominated, narrow viewpointed online traders we tend to forget that the majority of humanity lives paycheck to paycheck at best. (Spoken as a narrow minded male trader myself)
Most people don't think about it, but we're all in some market (buying and selling), all the time.
Gotta love that line. When are they talking about, the 19th century?