Robbie Burns
Robbie Burns's columns :
20/08/2010TIME FOR SPREADBETTING?
22/07/2010THIS FLOAT DOESN'T DELIVER
24/05/2010NEW FINANCIAL THRILLER
13/05/2010RISE OF THE MACHINES >>
09/04/2010Oil Woes
08/03/2010Return of the IPO ?
25/01/2010Waiting For The Comeback

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Robbie Burns – The Naked Trader

Robbie has been trading full-time since 2001. His book "The Naked Trader" (which also has useful information on how to use advfn) has become one of the biggest-selling finance books, reaching the top 150 books on Amazon - order it here. Trades made for Robbie's website have amassed profits of more than £300,000. You can read about his buys and sells daily at www.nakedtrader.co.uk.


RISE OF THE MACHINES

13/05/2010

I really, really thought I had seen everything in the markets but last Thursday had to be marked down as new.
 
The Dow plunged a thousand points in a few minutes. Why? Although it was already down there was no new news to make that happen.
 
No-one has appeared to own up but it does look like a "fat finger" trade which caused it.
 
Gossips say someone typed in B for billions instead of M for millions.
 
If correct  I think it is very worrying that someone can type in a wrong trade. How can there not be something to stop this?
 
This trade panicked the trading  robots into immediately selling everything causing some shares to go to zero. A bit like Terminator! Rise of the Machines!!
 
What kind of market is that? That's not a market, it's some kind of weird super casino and you're playing against crazy robots.
 
As an investor I am absolutely shocked that because of this so many people would have had their stops taken out over there, making any falls instantly worse.
 
In fact it's not worrying. It is downright unfair! Investors who had, probably rightly, been in a very solid and safe company Proctor and Gamble suddenly found their investment half gone because some halfwit made a mistake.
 
(It was a fat finger trade in Proctor apparently that sparked the trouble).
 
Also, it was exaggerated by what's called "High Frequency Trading" - a computerised programme that can sell huge amounts of shares in a nano second.
 
The same kind of thing is happening here too. There are computer programmes, robots and machines working against each other everywhere.
 
Many traders over here who trade the FTSE got hit by the sudden plunge which corrected itself quickly.
 
The worst thing is for more illiquid stock traded electronically and with market makers. Panicked investors selling up exaggerate the falls which are then made worse by the robot sellers, and CFD traders.
 
I think the fact robots, machines and crazy traders can screw up a market and make a share go to near zero for no reason at all is a total disgrace, and sheer daylight robbery.
 
I read a lot of trades were cancelled the next day - but this can't have stopped people making and losing money in an unfair way.
 
I hope systems will be worked on here to ensure it doesn't happen. In some automated traded shares it just takes a sell of a couple of grand to drive down a price - an auto trade sell of 50 grand could push it down 20% in a flash. It's not right and needs to be looked at urgently.
 
In the US authorities say they will introduce "circuit breakers" to prevent similar meltdowns from now on.
 
This is a must because if this keeps happening investors might decide enough is enough and give up putting their money in the markets for fear of losing their money.. not from making mistakes but being taken out by the equivalent of a crazy Arnie Schwartzenneger Terminator robot.
 
 


You can read Robbie’s daily market comments together with his latest buys and sells at his website www.nakedtrader.co.uk

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