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The SPEED of trading (now near the speed of light) creates manipulation, etc.!

April 30, 2013

Today, we can trade stocks, bonds, derivatives, and currencies in milliseconds. This ability to trade at near the speed of light has changed our markets. Manipulation is real and present in REAL-TIME given our current technology. Also, price suppression and price manipulation is easy now that trades can be executed and then cancelled prior to any settlement in real shares. Today, I can use an Algorithm to execute and trade (say SLV or GLD) and retain this position for seconds, minutes, or hours and then cancel this trade so that there is no settlement in the world of actual shares. Phantom shares are created (in real-time) via my Algorithm (often called a ‘naked short’ or a ‘naked long’) and then this transaction can be used to suppress and/or elevate the PRICE of a stock, ETF, currency, bond, or derivative. All this is now driven by our computer MACHINES!

The old days of Open Outcry…where paper shares and real traders negotiated trades is mostly over. Practically, all trading is now done via the computer, HFT computers, and Algorithms. Some claim that some 70% of trading volume is now done via HFT computers and Algorithms. This means that trading is being done at near the speed of light and transactions are executed and cancelled often within seconds or minutes. This speed of trading means that strategies like ‘naked shorts’ to manipulate and suppress prices (say of silver and gold) is easy and legal (as of now). Trades are not labeled as ‘naked shorts’ or ‘naked longs’ as these transactions are now executed and cancelled prior to any settlement action. See this video for a tutorial on HFT and Algorithmic  trading:

Our economic and trading markets have been totally changed from the old days where real human beings executed the trades. Today, we have a global computer network which allows trading 24/7 in most markets. The strategy today is to focus totally on ‘price’ and then follow the trend of ‘price’ UP or DOWN. Digital money units can be earned as the market trends UP and then additional digital units can be earned as the market trends DOWN. Smart traders today could care less about a Company’s fundamentals and/or VALUE in the ground (say for silver and gold mining shares). Value in the ground does not interest traders who desire to make their digital money units following a trend chart within the computer screen. The ONLY real interest among these sophisticated traders is ‘PRICE’ and TRENDS.

This means that we now live with a totally different emphasis within our markets and within trading. Money is made within the computer SCREEN (watching charts and following the money flows). Trades are executed by using Algorithms…and traders allow these Algorithms to execute BUY and SELL transactions instantaneously and at near the speed of light. All this is done with no human judgment in real-time  as all is pre-programmed within the computer algorithm. Algorithms do the executions and then the cancellations. All this is accomplished in milliseconds and many trades are on the ‘books’ with a market maker for mere minutes or at most hours. Our new technologies have created all this MANIPULATION and PRICE suppression within our markets (including the silver and gold markets).

What is now needed is for financial pundits and financial educators to rethink all their prior financial jargon so they can discern and understand our new trading markets. All this change has evolved in the past 15 years and mostly in the last 10 years. We now have a global computer network which does almost all of our trading, money transactions, QE operations, and financial manipulations. Our regulators are not in touch with how these speed of light transactions are affecting our markets (good or bad). My sense is that all this new technology is anathema to sound economic decision-making and sound financial transactions. To succeed in today’s markets one needs to understand computers, programming, algorithms, speed of light transactions, latency, co-location, HFT trading, naked shorts, and price manipulation in real-time.

None of today’s markets are logical, sound, or sustainable for the longer-term. We now live with manipulated markets from TOP/down. The biggest manipulators are our Central Banks and their proxies (those who we think of as TBTF). These financial entities use digital money units (created from Consciousness…Out of Nothing) to influence our Stock Markets…and  to manipulate many prices, interest rates, trends, and asset valuations. There is no possible way to think logically or with sound reason…given the nature of today’s markets and today’s computer/machine implementations and manipulations. Companies with sound ‘in-the-ground’ assets (say silver/gold/copper/etc. mining companies) can be VALUED by machines (and algorithms)…and given a PRICE/share which is totally unrelated to actual historical VALUE (in the ground or above the ground).

In conclusion, we need to get educated on our new markets and the new methodologies which have emerged in the past 10-15 years. Watch this video for a starter: Then ask yourself if you need to change your thinking and jargon given today’s markets. The old days of PAPER markets and paper PRINTING (by our Central Banks) is OVER and DONE. We now live in a NEW WORLD of ‘machines’ and a global NETWORK of computers for almost all our monetary transactions. Wake-up and think anew…that is my advice!  I am:

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