UK 'flash crash trader'
Discussion
This has to be the 'story' of the week.
This chap apparently lives in Hounslow, with his mom and dad, but wiped billions off the markets back in 2010.
Running some direct access trading software, incredible story.
Looking at his responses, he sounds barely literate, but clearly one smart guy.
Supposed to have made $40 million dollars altogether. ha ha, still living with his mom.
Just been granted bail at £5 million
http://www.express.co.uk/news/uk/572174/FBI-US-sto...
http://in.reuters.com/article/2015/04/22/flashcras...
This chap apparently lives in Hounslow, with his mom and dad, but wiped billions off the markets back in 2010.
Running some direct access trading software, incredible story.
Looking at his responses, he sounds barely literate, but clearly one smart guy.
Supposed to have made $40 million dollars altogether. ha ha, still living with his mom.
Just been granted bail at £5 million
http://www.express.co.uk/news/uk/572174/FBI-US-sto...
http://in.reuters.com/article/2015/04/22/flashcras...
He actually lives across the road from his parents but uses their address as his 'business' premises.
I suspect that he is not solely responsible for the crash but is a useful patsy. He will probably now be looking at enjoying an American 'justice' system that offers the choice between bankrupting yourself in order to plead not guilty - as well as the prospect of a life sentence - or putting his hands up to something he may not have done and hoping his lawyer can plea bargain something painless.
I suspect that he is not solely responsible for the crash but is a useful patsy. He will probably now be looking at enjoying an American 'justice' system that offers the choice between bankrupting yourself in order to plead not guilty - as well as the prospect of a life sentence - or putting his hands up to something he may not have done and hoping his lawyer can plea bargain something painless.
He, allegedly, cancelled the Sell orders but executed Buy orders after the price had dropped but before the market had reacted to the cancellations by rising again. Result a gain, all within milliseconds apparently. Done hundreds of times the gains mount up.
Aren't computers wonderful?
Aren't computers wonderful?
What he was doing was spoofing.
Basically he entered large sell orders at different prices above the current market price. This made it look like there was a large amount of sellers and put selling pressure on the stock. At the same time he shorted the stock and when it moved lower due to the selling pressure of those fake orders he would buy it back cheaper, to top it he also flipped it in reverse and bought lower and sold higher once his fake orders were cancelled.
Wasn't this guy trading futures? Didn't think that had anything to do with the flash crash
Basically he entered large sell orders at different prices above the current market price. This made it look like there was a large amount of sellers and put selling pressure on the stock. At the same time he shorted the stock and when it moved lower due to the selling pressure of those fake orders he would buy it back cheaper, to top it he also flipped it in reverse and bought lower and sold higher once his fake orders were cancelled.
Wasn't this guy trading futures? Didn't think that had anything to do with the flash crash
Edited by twinturboz on Wednesday 22 April 20:54
Pretty valid comment:
'Marcus Stanley of Americans for Financial Reform, a campaign group, said Mr Sarao’s arrest highlighted the weakness of regulation and fragmented markets.
“If your kid is playing around in your house and the floor collapses, is the problem that the kid was jumping up and down or that your house was built badly? You should have a structure that should withstand this kind of thing,” he said.'
http://www.ft.com/cms/s/0/afbb9b44-e8db-11e4-b7e8-...
'Marcus Stanley of Americans for Financial Reform, a campaign group, said Mr Sarao’s arrest highlighted the weakness of regulation and fragmented markets.
“If your kid is playing around in your house and the floor collapses, is the problem that the kid was jumping up and down or that your house was built badly? You should have a structure that should withstand this kind of thing,” he said.'
http://www.ft.com/cms/s/0/afbb9b44-e8db-11e4-b7e8-...
TTwiggy said:
I suspect that he is not solely responsible for the crash but is a useful patsy. He will probably now be looking at enjoying an American 'justice' system that offers the choice between bankrupting yourself in order to plead not guilty - as well as the prospect of a life sentence - or putting his hands up to something he may not have done and hoping his lawyer can plea bargain something painless.
Quite. If what he is reported to have done is correct, it sounds extremely similar to what the big (American) HFT firms have been doing every microsecond of every trading day for the last decade. In any event I don't believe it, the e-mini is a massively liquid contract (circa 2m a day), bearing in mind you need about $3000 margin per contract, even if he was using his entire reported fortune of $40m as margin he could have 'only' traded 13000 futures... hardly enough to collapse the s&p 1000 points. And if he did get filled on that order he could lose the lot in seconds. It just doesn't make any sense. Alternatively he could be a genius who has no concept of fear.Edited by anonymous-user on Wednesday 22 April 21:29
Dogwatch said:
He, allegedly, cancelled the Sell orders but executed Buy orders after the price had dropped but before the market had reacted to the cancellations by rising again. Result a gain, all within milliseconds apparently. Done hundreds of times the gains mount up.
Aren't computers wonderful?
There was a fascinating piece about this on radio4 a year or so ago. Not this case but computers trading in micro seconds basically software evolving to beat other software and trade faster.Aren't computers wonderful?
This isn't anything new and if it's illegal then they had better get some bigger gaols because it's not uncommon.
Pesty said:
Dogwatch said:
He, allegedly, cancelled the Sell orders but executed Buy orders after the price had dropped but before the market had reacted to the cancellations by rising again. Result a gain, all within milliseconds apparently. Done hundreds of times the gains mount up.
Aren't computers wonderful?
There was a fascinating piece about this on radio4 a year or so ago. Not this case but computers trading in micro seconds basically software evolving to beat other software and trade faster.Aren't computers wonderful?
This isn't anything new and if it's illegal then they had better get some bigger gaols because it's not uncommon.
I call fall guy, who may have inadvertently breached a few of the SEC/CFTC byzantine regulations whilst outwitting 'the man'. They have been under lots of pressure to explain the flash crash. A big conviction to dispel the notion that there are ghosts in the machine is just what they need. Poor chap.
Edited by anonymous-user on Wednesday 22 April 22:57
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