5 ms·

Strange article. Lots of text but missing the main thing I was looking for. What kind "erroneus trades"? where did the money go? If you buy stock at the market

Strange article. Lots of text but missing the main thing I was looking for. What kind "erroneus trades"? where did the money go? If you buy stock at the market you did not intend to buy, why not just sell them the next day?

jonah 14y ago
Seems like maybe they couldn't hold on to the stock for long enough to unload the enormous volume they were dealing with. It sounded like at one point they were doing AS MUCH VOLUME AS EVERYONE ELSE on the exchange combined. http://news.ycombinator.com/item?id=4337750 http://news.ycombinator.com/item?id=4337750
- Devilboy 14y ago
  Since there's 2 parties to every trade doesn't that make 50% the limit?
  - jonah 14y ago
    Trading volume is number of shares traded, not number of trades. Re-reading, it was actually ~600% greater volume. "The difference reached a peak at 9:58 a.m., when the volume was six times greater." That's pretty noticable!
  - sp332 14y ago
    Nope, sometimes they bought stock they sold themselves!
    - Devilboy 14y ago
      If you sell stock to yourself... why even bother to go through the exchange? Why would the exchange even allow such trades?
      - sp332 14y ago
        Knight has different programs running. It was handling >10% of all NYSE, so it must have been running a lot of servers. When the berserk algorithm wanted to buy or sell a stock where Knight was the only "market-maker", another Knight server would usually intercept the order after it had been posted on the exchange. Here's one way it might have happened: http://www.nanex.net/aqck2/3525.html http://www.nanex.net/aqck2/3525.html
iskander 14y ago
You can get more technical details from nanex: http://www.nanex.net/aqck2/3522.html http://www.nanex.net/aqck2/3522.html Essentially, they were buying high and selling low. Many times a second.
noselasd 14y ago
Because the program sold the stock it bought immediately, at a loss. Leaving you with nothing to sell the next day.

jonah 14y ago

Seems like maybe they couldn't hold on to the stock for long enough to unload the enormous volume they were dealing with. It sounded like at one point they were doing AS MUCH VOLUME AS EVERYONE ELSE on the exchange combined. http://news.ycombinator.com/item?id=4337750 http://news.ycombinator.com/item?id=4337750

Devilboy 14y ago
Since there's 2 parties to every trade doesn't that make 50% the limit?
- jonah 14y ago
  Trading volume is number of shares traded, not number of trades. Re-reading, it was actually ~600% greater volume. "The difference reached a peak at 9:58 a.m., when the volume was six times greater." That's pretty noticable!
- sp332 14y ago
  Nope, sometimes they bought stock they sold themselves!
  - Devilboy 14y ago
    If you sell stock to yourself... why even bother to go through the exchange? Why would the exchange even allow such trades?
    - sp332 14y ago
      Knight has different programs running. It was handling >10% of all NYSE, so it must have been running a lot of servers. When the berserk algorithm wanted to buy or sell a stock where Knight was the only "market-maker", another Knight server would usually intercept the order after it had been posted on the exchange. Here's one way it might have happened: http://www.nanex.net/aqck2/3525.html http://www.nanex.net/aqck2/3525.html

iskander 14y ago

You can get more technical details from nanex: http://www.nanex.net/aqck2/3522.html http://www.nanex.net/aqck2/3522.html Essentially, they were buying high and selling low. Many times a second.

noselasd 14y ago

Because the program sold the stock it bought immediately, at a loss. Leaving you with nothing to sell the next day.