Know What They Do to Your 401k?

The Tibra Computer. It ain't a Bank of Fridges on Sale.

What's in the Basement of Money Center Banks

Those aren't supercomputers for NASA, NOAA or some research university. They're high frequency trading supercomputers. These are what the Big Boys use to trade stocks. High frequency trading is a legal form of theft. Like the name suggests, these computers can make millions of trades in a second and all they hope to do is make ONE single penny on a trade. Think that's crap money? Here's a lesson in cumulative effect.

.01 x 1,000,000 TRADES PER FUCKING SECOND = $10,000

It's been estimated that now, in 2016, perhaps 90% of all stock trades are between these computers. There are real humans out there still trading, but since retail stock trading is dinosaur slow, it no longer counts for the majority of trades in a day now. My supposedly “fast” desktop is an abacus compared to what Goldman Sachs or Societie Gernerale has in their basements.

Another thing, stocks aren't traded in NYC anymore, not really. That news story you see of guys running around on the floor or when you hear the bell ringing the open or the ending of the trading day is just a remnant now. The real gaming goes on at the NYSE Euronext Data Center in Mahwah, NJ in a 400,000 sq ft building.

This is where it's all done now. The Force Awakens Looks like this, No? Your 401k is in there somewhere.

High frequency traders aren't just satisfied with satellites, microwave transmitters either. They've now opted to use laser data transfer over the air because microwave tech is too damn slow! More of these transmitters are being installed on the radio masts in Mahwah. 

So, how does these buggers screw you in a trade? They have myriad ways. One is front running, where a trading company fucks over their own clients on information. Since their supercomputers can process this info faster, they can beat a few thousand dollars out of their own clients who are late in catching up. The lesson here? Never trust a bank or trading house to look out for your investments because today, they'll rip off their own customers.

This is legal.

Another sleazy way is called market making. Their computers will toss out thousands of fake buy or sell orders where they have no intention of finally executing them. It's an “intention to buy or sell” but never puts out. They can move a stock's price by this alone. So, they can make a herd of blind traders move up or down, and scalp them as they pass by.

This too is legal.

So, how do you beat the fuckers? You NEVER place a market order where they can beat your ass silly by raising a price on a stock you're trying to buy or pushing it down when your trying to sell. Their damn computers will chase your trade and try to trip you up.  You place limit orders, but even with those, they try to screw with you too but it's much harder.

What these computers do has nothing to do with determining whether say, Apple is a good buy today or if they should unload Exxon stock. The financial health, future earnings of a compnay has shit to do with it anymore.

It's all about watching herd behavior in the market and getting ahead of it or manipulating it. These computers see every trade, attempt to trade, every trend. They even filter news stories that are breaking in order to get a second or two ahead of everyone else in order to scalp you.

That nutbag who shot up his office Christmas party last month in California? The computers were trading that information, knowing it would depress the markets, before most people heard the story. If they can do it for two minutes, it's enough to make thousands.

You think betting on the Patriots is dicey, play this game instead.