Order spoofing

[notouch 10]

Something interesting happened today in YM which happens quite often. If you looked at the order book 15-20 minutes after the open you would have seen about 450 bids sitting above the monthly pivot at 12764. Normally you don't see 450 bids or offers at any one price in YM so it was a fairly blatant example or order spoofing. The purpose of order spoofing is so newbies will try to put orders ahead of the big one. The spoofer then sells to the newbies and pulls his bids. The price then collapses, as happened today. If you can identify order spoofing you can be on the side of the big player and against the newbies.

[Soultrader 12]

I am very glad to see that you caught on that one notouch. I was actually long from a few ticks above but had a reverse order at 12763.. 1 tick below the monster bid.

 

I had it placed at 12763 because I knew the moment 12764 was taken out, price was going to collapse. I saw tape trying to bid hard above 764.. it was trying to climb back up above 670, tested it mulitple times and failed. The tape was showing clear weakness hence the reason why I took a 6 tick loss and reversed immediately. Tape tells it all

 

Good post notouch.

[GCB 10]

Where are you guys seeing these bid sizes on TS? Level II? The "Matrix?" Thanks.

[wsam29 10]

All it takes is for them to cancel to order to remove any supporting or resisting order.

 

They do that stuff all the time on Level 2 for nasdaq stocks and I'm not surprised someone is doing it for the YM as well.

 

But also think of it this way, at 450 lots, that's $2250 per tick. Were they trying to really sell rather than buy knowing that "newbies" would see that huge bid and go long the market.

 

We'll never know, just speculate because they may have been offering the market on a smaller size.

 

There was one thing I noticed a while ago, the levels were pretty thick for about 5 levels below the best bid around 200 lots each level, that support held, I don't know what the tape did, but prices rallied from that point.

[Soultrader 12]

Where are you guys seeing these bid sizes on TS? Level II? The "Matrix?" Thanks.

 

The matrix shows bids/asks 4-5 levels deep. With futures, it is nothing like watching Level 2 market maker games but it is quite interesting when you see 200-400 lot bid/ask getting pulled away.

[Happyguy 10]

I see this happens very often on S & P e-mini. It can be a sucker play for the novice. This is the main reason that we can not use the figures in the order book to judge the supply or demand.

[Nick1984 10]

does anyone know of the legalities of such an action? In Australia there are laws against market manipulation and price manipulation but I'm not 100% sure on how they work. I've thought about doing something similar myself just to see if i can get a few ppl thinking there is a large move happening in a particular stock but stopped myself short because I faced a moral dilema!

[notouch 10]

Perfectly legal. There's worse manipulation for individual stocks.

[brownsfan019 17]

The matrix shows bids/asks 4-5 levels deep. With futures, it is nothing like watching Level 2 market maker games but it is quite interesting when you see 200-400 lot bid/ask getting pulled away.

 

Soul - on my trading platform I have 10 levels deep on the YM. I understand that the CBOT offers 10, but some platforms only provide 5. Just an FYI in case that's of interest to anyone.

[dalby 10]

I have 10 too.

 

Ime (limited as it is), I have found that the sizes on the bid/ask are bogus a great percentage of the time. It's mostly to try to fool people.

 

 

I will look at the sizes as to where to place orders sometimes, but never to try to predict market direction.

 

Tape doesn't lie. the order book does

[Soultrader 12]

I have 10 too.

 

Ime (limited as it is), I have found that the sizes on the bid/ask are bogus a great percentage of the time. It's mostly to try to fool people.

 

 

I will look at the sizes as to where to place orders sometimes, but never to try to predict market direction.

 

Tape doesn't lie. the order book does

 

Totally agree. I never trust those darn Level 2. Just once in a while you catch something interesting .

[Guest cooter]

Soul - on my trading platform I have 10 levels deep on the YM. I understand that the CBOT offers 10, but some platforms only provide 5. Just an FYI in case that's of interest to anyone.

 

Actually the CBOT offers 15 levels deep; at least that's what I see from my broker on the Dow contracts and the US Treasury futures...

 

Interesting thing is that the TS matrix (or at least the T&S and charts) are actually faster than the order matrix from one of my brokers - go figure.

[brownsfan019 17]

It can get real interesting in premarket times on the indexes. Here was one example on the YM this morning.