Every sell is someone else's buy, and every buy is someone else's trade.
If you saw a bunch of activity happening milliseconds before it should, why would you be the other party to someone you suspect is committing fraud? You will be the primary victim of the fraud.
If you saw a bunch of activity happening milliseconds before it should, why would you be the other party to someone you suspect is committing fraud?
If no such report had come out milliseconds later, the activity wouldn't be suspect. How could a person (or in this case, given the timeframe, an algorithm) possibly distinguish this spike from a 'legitimate' spike? It doesn't make sense to blame the victim of a fraud when the victim has no way of knowing at the time that they are being defrauded.
To the millisecond? I suppose it's possible. Even so, rumors drive spikes all the time. Someone could put out a false report, committing fraud in the reverse direction. I still doubt such a fraud could be detected at the time in any remotely reliable way.
The report is a government report, in machine-readable format, that is taken from a government server. If you wanted to put out a false report, you would have to hack the server or the connection to the server.
Are you saying that, after reading the natural gas report and having hours to digest it, you could make a better decision of where to hedge your position / whether to place buy/sell orders, than by simply knowing when the report was to come out, and anticipating a storm of activity immediately preceeding it?
If the time that the report was due out was not known in advance, I could see this being suspicious. But just finding a flurry of activity at a time when you judge that it might have been prudent to wait and read the news first, that is not any evidence of illegal activity or fraud.
It is evidence that these day traders are getting more confident in the ability of their robots. That is true.
Rule # Evleventy Billion Six Hundred Thirty Eight:
Look around the room and try to spot the sucker. If you can't find him...
True... it's not like there are a lot of rubes out there with orders 400ms before data is scheduled to be released, who aren't still going to be there 400ms later.
The question is who gets to do the fleecing of the rubes.
So if someone did figure out a way to play the system and get it a little early that's interesting... if someone on the inside is playing fast and loose to make sure the right people get first crack at any small orders that happen to have been left in the system, that's a problem.
But, yeah, it shouldn't be super big bucks at stake...beyond some small initial volume, anyone you're going to trade with is going to know what's up.
If you saw a bunch of activity happening milliseconds before it should, why would you be the other party to someone you suspect is committing fraud? You will be the primary victim of the fraud.