Bro cashed out way too much

[u/be_you_tiful-]

A man working from his parents' house in West London made tens of millions of dollars trading futures from a bedroom filled with stuffed toys. His name is Navinder Singh Sarao, and he's on the autism spectrum.

There was no Wall Street trading floor. Sarao worked out of the family home in Hounslow, using a customized trading program on an ordinary desktop computer, and by most accounts he lived a pretty quiet life.

Then came May 6, 2010. In a matter of minutes, US stock markets plunged, and nearly $1 trillion in value briefly vanished before prices bounced back. It became known as the Flash Crash.

Years later, US authorities said Sarao's spoofing helped make it worse. Prosecutors said he placed large sell orders he never intended to fill, then canceled them, which pushed prices down so he could profit from the swings. They said his strategy was running on the day of the crash, and that he made more than $40 million from this kind of trading over several years.

Sarao fought extradition from the UK for years. He eventually pleaded guilty to wire fraud and spoofing in the US. His lawyers pointed to his autism, and the judge sentenced him to time served followed by home confinement rather than more prison time, citing his cooperation with prosecutors.

[u/Cold-Crab74]

So it's a problem when he does it but when the president does it it's fine.

[u/octipice → u/[deleted]]

You're glossing over the incredibly important implications of prices in HFT being influenced by trades that haven't been executed yet.

HFT is essentially a way for large investment firms to steal money from retail traders (or anyone not doing HFT) by being able to see what is about to happen in the market and make moves before everyone else can. It is a literal crystal ball and should be illegal.

Instead what is illegal is using HFT to make ot so other HFTs see a "false future" in their crystal balls instead of the actual one. To be clear this is a "crime" that only results in using the advantage that HFTs have over everyone else to take money off of them, while HFT in general is used to constantly take money off of the rest of us.

HFT is one of the biggest scams in the world where the ultra wealthy are leeching money off of all of us and providing nothing of value in return. HFT never should've been legal in the first place.

[u/melkatron → u/[deleted]]

...isn't that exactly what the few HFT-enabled brokerage firms have?

[u/321aholiab → u/melkatron]

Nice one comrade

[u/DonkeyFries → u/[deleted]]

Let me make sure I understand what you are saying.

There are algorithms that make trades incredibly quickly, in milliseconds, far faster than any human could actually make trades that are in any way legitimate. And there are other algorithms that detect trades far faster than any human could, or, you know, faster than the reality of demand. And someone used this system that someone else established to manipulate the price. Because it’s bad when a lowly peon games the system but fine when established interests do.

Or am I not understanding something?

[u/studiodonz → u/DonkeyFries]

And supposedly there are remote and secret facilities in the High Frequency Trading infrastructure where microseconds advantages are created on international trade traffic. In bunkers guarded by mercs. Like if C.O.B.R.A. from G.I. Joe did physical trade manipulation.

[u/anclandor → u/DonkeyFries]

Yeah I think you are. It sounds like (from the above comment) there is a specific trading strategy where you basically lie by putting in a bunch of buy orders you don't plan to close, to manipulate prices. This strategy is illegal for everyone. It's also not possible to perform without having HF or UHF trading, so access to those abilities is heavily regulated.  Any brokerage firm (an in-between that purchases and sells stocks for investors) that offers such services must have systems in place to prevent people from using this tactic.

[u/tartoran → u/anclandor]

I think he's more complaining that HF trading exists at all because "humans could not trade that fast" or some shit lol. I don't think its worth engaging

[u/McLamb_A → u/DonkeyFries]

That's exactly right. The large brokerage firms are "too big to fail". So when something bad happens with the markets, they're the first to cash out leaving the rest of us holding the bag.

[u/Beekeeper_Dan → u/McLamb_A]

Or put differently, it’s only crime if you’re not rich already

[u/drewster23 → u/McLamb_A]

Except that's not what this is about.

It's about the specific illegal method, not just "getting rich".

You can say the same thing about insider trading but people even rich people do go go jail for it....

[u/McLamb_A → u/drewster23]

True. My point was that those firms use the instant trading to legally beat the rest of us when things happen. They almost never lose while the common folks lose their shirts.

[u/drewster23 → u/DonkeyFries]

Because it’s bad when a lowly peon games the system but fine when established interests do.

Errr no because the high frequency traders aren't doing the illegal things he was doing to trade.

[u/octipice → u/drewster23]

No, they HFTs are doing something far worse but lobbied politicians to make it legal.

[u/Specialist-Clue1151 → u/DonkeyFries]

No, front loading and spoofing is a very specific type of manipulation that is illegal for both large firms and individuals.

[u/kiddpk → u/[deleted]]

I don't know it kind of sounds like he understood. The guy manipulated the markets and created artificial interest before anything could actually be concretely done to his accounts. But it boils down to artificial interest and artificial lost in interest. Which is the everyday hedge fund routine

[u/drewster23 → u/kiddpk]

No , the specific method he did is illegal for him you and hft firms. And is not standard practice at all

[u/kiddpk → u/drewster23]

Never said it was. I'm talking about the end result. Also if one of these firms uses this technology or any method that's illegal will make, for example 500 million to be fined 100 million