209742
Order Anticipators and
Market Manipulation
- Order anticipators
- Parasitic traders that make prices more volatile
and markets less efficient
- Types of anticipators
- Front runners
- Trade ahead of known large market orders
- Trade in front of (on same side as) large limit orders
- Trade ahead of known large market orders
- Sentiment orientated technical traders
- Try to predict trades that uninformed
traders have not yet made
- Predict seasonal
trading patterns
- Predict hedging trades
- Try to predict trades that uninformed
traders have not yet made
- Squeezers
- Try to exploit traders who trade by
'cornering the market'
- Illegal, but hard to distinguish from speculation
- Short-sellers beware
- Try to exploit traders who trade by
'cornering the market'
- Manipulation of stop orders
- "Gunning the market" against other's
stop orders
- "Gunning the market" against other's
stop orders
- Front runners
- Parasitic traders that make prices more volatile
and markets less efficient
- Market Manipulation
- Conduct intended to induce people to trade a
security or force its price to an artificial level
- Deliberate interference with supply and
demand
- Stock price does not reflect
fundamental value in short run
- Long run investment focus is best
- Long run investment focus is best
- Stock price does not reflect
fundamental value in short run
- No possession of valuable information
- Belief that prices wouldn't move
like this otherwise
- Regulated against in Corporations Act
- Types of market manipulation
- Bluffing
- Fooling others to trade as if you have valuable info
- Hard to distinguish from informed traders
- Value traders may find profitable
opportunities in the bluff (calling their bluff)
- Fooling others to trade as if you have valuable info
- Spoofing
- Placing a quote that will be cancelled prior to execution
- Delay trades in the market
- Create appearance of market depth (layering)
- Placing a quote that will be cancelled prior to execution
- Pump and dump schemes
- Buying shares and then hyping up their
worth to encourage price increase
- Result in sale at higher price
- Result in sale at higher price
- Requires disclosure of interest in
shares when recommending to be legal
- Buying shares and then hyping up their
worth to encourage price increase
- Banging the close
- Buy/sell futures to benefit an option
position that is based off the futures
price on that day
- Buy/sell futures to benefit an option
position that is based off the futures
price on that day
- Ramping the market
- Increase price to create illusion of
voluminous trading to make a quick profit
- Increase price to create illusion of
voluminous trading to make a quick profit
- Pooling or churning
- Buy and sell orders at same price to increase
activity, and then increase price
- Buy and sell orders at same price to increase
activity, and then increase price
- Bluffing
- Conduct intended to induce people to trade a
security or force its price to an artificial level
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