What can one lone trader at home achieve?

[SantaClaus]

This is the bit I don't get. How was able to process these transactions so quick over the connections available to a typical household? Especially if you factor the potential losses of not cancelling an order in time.

Yep, as BlasterBates said, he was just placing orders that he didn't want executed.

It happens every day in the markets, so I don't know how they can blame one person.

When you place a limit order at a price, it joins a queue - first in first out type of thing.
The spoofers pull their orders just before they reach the front of the queue at their chosen price. That will def. need a fast connection.

[d000hg]

Exactly... another case of a game that little people are not allowed to join in.

Influencing the market and directly defrauding it are not the same. A company who did the same thing he did and got noticed would be penalised.

[SantaClaus]

Influencing the market and directly defrauding it are not the same. A company who did the same thing he did and got noticed would be penalised.

He wasn't defrauding it, he was influencing by creating the impression there were large sell orders and then removing them.

Algo trading companies do this all the time. Market manipulation is how the markets work.

[d000hg]

Creating many orders over and over again with the deliberate intention of cancelling them IS fraud.

[SantaClaus]

Creating many orders over and over again with the deliberate intention of cancelling them IS fraud.

Well in that case, it happens on a daily basis, all day, every day.

But don't take my word for it, set yourself up with a trading platform that has a DOM (Depth of Market) and watch it all day.

[SantaClaus]

Interesting article for you finance techies...

Spoofers Keep Markets Honest

Spoofers Keep Markets Honest - Bloomberg View

[DimPrawn]

It's not me, but I know who it was. The guy was a top trader at Futex.

Seriously though, big corporations are fighting to site their HFT servers as close to the exchange as possible, even building fibre optic connections in a straight line to save nanoseconds. And you're telling me that this guy "Nav" caused the crash all by himself from a rundown semi in Hounslow?

The guy had made millions, I doubt his trading software was running from that semi, more like a dedicated server hosted very close to the exchange with tiny latencies. He just managed the software from the house in Hounslow.

He probably had faster trades than many of the banks.

[BlasterBates]

I don't think he did cause the flash crash:

Guy Trading at Home Caused the Flash Crash - Bloomberg View

but probably helped it a bit

The problem was he overdid it. From that article he was told off for spoofing but told the Exchange to "kiss my ass"...and continued to spoof. Looks like someone got p*ssed off and shopped him.

As Santa says they're all at it but as long as they don't overdo it they probably turn a blind eye. Basically if they don't damage the exchange they're not bothered, exchange earns money on each trade so while they're earning commission they don't care. During the flash crash they had SEC sniffing around, so that's when they decided to clamp down.

[vetran]

I don't think he did cause the flash crash:

Guy Trading at Home Caused the Flash Crash - Bloomberg View

but probably helped it a bit

The problem was he overdid it. From that article he was told off for spoofing but told the Exchange to "kiss my ass"...and continued to spoof. Looks like someone got p*ssed off and shopped him.

As Santa says they're all at it but as long as they don't overdo it they probably turn a blind eye. Basically if they don't damage the exchange they're not bothered, exchange earns money on each trade so while they're earning commission they don't care. During the flash crash they had SEC sniffing around, so that's when they decided to clamp down.

No honour among thieves?

[BrilloPad]

I don't think he did cause the flash crash:

Guy Trading at Home Caused the Flash Crash - Bloomberg View

but probably helped it a bit

The problem was he overdid it. From that article he was told off for spoofing but told the Exchange to "kiss my ass"...and continued to spoof. Looks like someone got p*ssed off and shopped him.

As Santa says they're all at it but as long as they don't overdo it they probably turn a blind eye. Basically if they don't damage the exchange they're not bothered, exchange earns money on each trade so while they're earning commission they don't care. During the flash crash they had SEC sniffing around, so that's when they decided to clamp down.

Indeed. Its like tax avoidance. As long as the rich do it then fine. But when the poor start there is a clampdown.