|
PureBytes Links
Trading Reference Links
|
Gary:
Your skepticism of most of the comments about the floor traders running
stops is well founded. I have so far been able to keep
my little fingers from spouting off about this subject which will make a
lot of people here happy, because when I start I have a problem
stopping. I came close to buying a seat on the Merk. in 1968, last sale
at the time was $12,500. A few years ago it hit over $800,000. I hope
this is the only stupid thing I admit to on here. In 1984 I went back
to NY from CA and considered buying a seat on the NY Futures Exchange.
I decided against that for weather reasons. This is all I intend to say
at this time
concerning this subject.
Norman E.
Gary Fritz wrote:
> Ira wrote:
> > It is no secret where the stops are. YOu can look at any chart
> > and see. They also get the breakout traders. they take the market
> > to a new high and then slam it. You can do anything you want on or
> > off of the floor if you know how.
>
> That's all fairly common knowledge, but I want to ask a really basic
> and probably naive question:
>
> **HOW** do the floor traders "take the market" anywhere?
>
> It seems to me, from a simplistic point of view, that at any moment
> there is a "fair price" for any commodity. That's the agreed-upon
> price arrived at by buyers and sellers in the market at that moment.
> How does the floor trader disrupt that balance and move the price
> away from its "real" fair price, then "slam it" back again?
>
> I assume that the stop-runner moves the price by e.g. bidding well
> above the current price with a small number of contracts. Then, once
> the market moves up to his bid and gets to the area where all the buy
> stops are sitting, he sells aggressively into those stops. The
> selling pressure (and the sudden lack of artificially-high bids) then
> moves the market back to its "real" price. Any losses that the
> runner suffers on his bids are more than made up by the profits on
> his larger sells.
>
> Is that about right?
>
> What's always confused me about this scenario is WHY the market would
> follow the stop-runner's bids like obedient sheep. Is the market
> really so easy to manipulate (at least during the thin periods that I
> assume are the prime stop-running times) that a few contracts bid
> above the current price will move the whole shebang? Wouldn't the
> runner have to keep bidding and bidding and bidding above the market,
> or else the previous supply/demand forces would come into play and
> snap the market back to its former equilibrium? (Or are the runner's
> few contracts enough to *change* that equilibrium??) How does the
> runner keep the market moving to his desired target -- do the rest of
> the floor traders smell blood too, and help him move it?
>
> Lastly, Ira, you say you can do it on or off the floor. I'm having a
> little trouble imagining how a single small (or even fairly large)
> off-floor trader could initiate a market move like that, unless he's
> able to spark the same blood-lust on the floor that the on-floor
> runner was relying on. Is that really do-able, or just theoretically
> possible? Or are you saying that the smart off-floor trader will
> WATCH for one of these stop-running moves, and sell when the price
> reaches the obvious stop-resting point, just like the runner did?
>
> Thanks,
> Gary
|