U.S. Markets closed

MrTopStep tackles the algos in webinar Saturday

Danny Riley

Image: Nanex    There is a lot of talk right now about the “cause and effects” of algorithmic / high frequency trading. We already know that the algos make money by picking our pockets, but what we don't know is if it’s ever going to stop.    When debating the pros and cons of algorithmic trading, you can argue all day about it, debate it, stomp your feet, pick it apart, but in the end there really isn't anything anyone can do about it. Sure, Dodd-Frank can set up new regulations, but the practice is evolving so fast the rules will need to be able to do the same. The other part is what would happen if the practice was banned? I'll tell you -- volume in the S&P would drop by over 50%!   The truth of the matter is with volume down so much on the NYSE and many of the other stock exchanges, the algo boys just do not make as much there as they used to, so what did they do? They moved into the futures game and now they are quickly moving into the options. There is no place you can hide. I never claimed to be perfect but I also think you know I am an avid follower of the markets and I have some solid street smarts. For years getting in and getting out of futures positions was easy. In most cases if you were down you could trade your way back. It doesn't work that way anymore. Once you start losing, the algos make it even harder to make the money back. A trade that you had on right got hit by an algo blip and you got stopped out and then 10 minutes later is moving back in your favored direction. We see it all the time. This weekend I am heading up a webinar called “The Rise of Algorithmic Trading.” This webinar is going to walk through where we were and where we are now.     I did the UBS program trading business on the floor for nine years. Things have changed and I can still read the levels, but it’s increasingly harder to do. Yes, things continue to evolve on the trading floor of the CME Group. More traders are disappearing. That change is open for everyone to see. But what is not clear are the changes in algorithmic trading and the effects it has on day traders. This weekend it’s my turn to say it like it is ...   I want to thank all of you that follow MrTopStep and wish you a very happy Easter holiday weekend. I hope to see you this Saturday, March 30, at 11:00 CT.    Link to sign up: https://mrtopstep.omnovia.com/registration/pid=53251363269750    Our view: The clock is ticking down on the last trading day of the first quarter. It’s amazing how quickly it flew by. The question of the day: Is the S&P going up or down? We think we will see both sides again, but we also think the level of trade will decrease significantly as the morning rolls on. All we can say is one of MrTopStep’s favorite trading rules is NO STOPS GO UNTOUCHED IN THE S&P and above 1558.70 that rule will go into effect. Hope to see you at Saturday’s webinar and remember to keep an eye on the 10-handle rule.

webinar algo trading
  • It’s 7:00 a.m. and the ESM is up 1.5 handles at 1558.25, crude (CLJ) is up .15 at 96.73 and the ECM is up 26 pips at 1.2808. 
  • In Asia, China shares suffered their worst loss since March 4 and 6 out of 11 markets closed lower (Shanghai Comp. -2.82%, Hang Seng -0.74%, Nikkei -1.265). 
  • In Europe, 11 out of 12 markets are trading higher (CAC +0.44%, DAX +0.38%).
  • Today’s headline: S&P Futures Seen Lower As Cyprus Banks Reopen”
  • Total volume: 1.56mil ESM and 7.8kk SPM traded 
  • Fair value: S&P +2.20, NASDAQ +5.22
  • Economic calendar: GDP, jobless claims, corporate profits, Chicago PMI, nat gas

MrTopStep Closing Print Video: https://mr-topstep.com/index.php/multimedia/latest-you-tube-videos/danny-riley-closing-print/video/latest/closing-print-3-27-2013    Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.  _____________________________________________________ Follow us on Twitter @MrTopStep https://twitter.com/mrtopstep Sign up for our free mailing list at http://mrtopstep.com/ for full report. DISCLAIMER: The information and data in the above report were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities.  { jathumbnailoff }