Oct

27

Spoofing, from Jeff Watson

October 27, 2015 |

 "U.S. to prosecute high-speed trader in first criminal spoofing trial."

Has it ever occurred to anyone that some of these "spoofed" orders were put out there, not as spoofs, but as real orders to get filled? The markets are still a game of deception, and spoofing is a valuable tool. I knew guys that would bid for 3 mm bushels a half cent under the market and would pull the bid when it got close (it was a primitive spoof but it worked). Sometimes traders put out the "spoof orders", got hit and were able to adjust their position, whatever way it was, and the counterparty has no clue what's going on.

There's always someone out there that, for whatever reasons, will always take the other side of a huge order. There is also an idea going around that if you can hit and fade a spoof order you will make money, and this is not necessarily true. As an aside, in the grains, it's usually easier to get your price for a half million bushels than if you were are trying to buy or sell 5,000 bushels where you will get dicked around for a quarter cent. There is always a big commercial, grain company, hedger, or large spec willing to take the other side of a big order, and there is a good chance you will get filled at your price.. 


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