We Call B.S. On The ‘Bots Again!

Before hitting the hay we need to call a big B.S. on the bastard ‘bots from Rip (Off) City.    They screwed us again yesterday (June 14) in crude oil futures.

First, before we get into the trade,  a little background.

We have posted about our experiences of being ripped off by these “so-called” trading ‘bots, who prey and stalk the markets, looking to pick-off  traders through blatant market manipulation.   Flash crash, my arse.

We put on a short position in nattie Thursday night before driving back from Sacramento to the Bay Area. We checked the market at dinner and see its down about 1 percent, we feel happy and give high fives. Then we look at the position and we have none!

It was taken out (buy stop) as a Seek and Destroy Bot came in around around 9 pm, guns the market to the upside to take out all the buy stops of the short sellers, then turns around and guns it to the downside to destroy all sell stops of longs. Finally, moves the market back to where it was before all the nonsense began.  Not a bad day’s work for the robot.  – GMM, January 2017

But, this is the doozy:

Remember the AP Twitter hack in April 2013, where,

“Wall Street collided with social media on Tuesday, when a false tweet from a trusted news organization sent the US stock market into free fall.

The 143-point fall in the Dow Jones industrial average came after hackers sent a message from the Twitter feed of the Associated Press, saying the White House had been hit by two explosions and that Barack Obama was injured. The fake tweet, which was immediately corrected by Associated Press employees, caused a sensation on Twitter and in the stock market.”  – The Guardian

That one cost us big as our long stops were hit. – GMM, January 2017

Never heard a word after that ugly April day in 2013.   Why didn’t the SEC follow up on this or keep the public posted on their investigations?

Was it a Russian 400 pound hacker/day trader sitting on his bed in New Jersey parlaying the hack into an easy money short trade?   We have zero doubt it was “financial nefarious”  and the AP hack was done to manipulate the market.   Somebody made a ton of money,  some of it ours.

To be fair, perhaps the SEC did follow up and informed the public of its findings and we just missed it.

Wednesday’s Crude Oil Trade
As you know crude oil has been trading very ugly since OPEC announced the externsion of their production cuts, falling more than 10 percent from the May 25th recent high.

If the market can’t go up on an OPEC cut, we figure its time to get shorty crude oil.   Usually,  we don’t go into an inventory number with a sizable position, but given the ugly API inventory data on Tuesday and the strong downtrend,  we decide to keep the short on through EIA , which is released at 10:30 AM eastern.

About 10 seconds before the release the crude price gaps up $.50 taking out our buy stop and then immediately gaps down on the number.  It was too fast for a human to execute and was definitely a machine.

Check out Wednesday’s one minute price chart,

Crude_June15

Note the big spike up at just before 9:30 AM central.  It wasn’t a headfake as it took place just a few seconds before the data release.  We put the short back on about a $.70 lower from where the machine flogged us.   Expensive.  It cost us (both accounting and economic losses) around $5K.   Bastard ‘bots!

An aside,  crude now feels kind of sold out to us.

We’ll admit maybe some bad trading on our part — leaving a stop hanging out there before a data release — but this is TOTAL BULLSHIT.     Where in the hell is the CFTC and SEC?

No wonder the hoi polloi are starting to revolt.

Beware the “American Street.”

Long water cannons/short John Henry, the Steel Driving Man.

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23 Responses to We Call B.S. On The ‘Bots Again!

  1. David says:

    Hi. This also about how to manage stops. Maybe 15 years ago was short nikkei futures and were down 5% overnight. Imagine how I felt when I saw I had no position.. Market went up 1 % first! Still annoys me!

    Best wishes

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  16. EuroTRader says:

    This was a CLASSIC head-fake going into the Crude Oil Report. Volume dries-up, leaving little except the sitting stops. Just because it was the HFT computers took them out and not market makers . . . well, that’s just testament to the fact that the Crude Oil futures market is NOTHING BUT the HFT computers anymore! That’s what I would be outraged over. The way the C.M.E. has sold its soul to HFTs — even allowing OFFICERS of the C.M.E. to hold highly conflicting equity positions in HFT firms!!!

    Trading the Crude Oil Report is dangerous until you learn the normal patterns . . . of which this is one. After that, although not risk-free, it is usually very profitable.

    At least you were able to get back in and make back some of your losses. Lesson learned.

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  19. PC says:

    No surprise here. This is the world we live in. Also, you’d be better off without the stops 🙂

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