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Block Trade Observations

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milpitas, ca, usa
 
Trading Experience: Intermediate
Platform: Tradestation
Broker/Data: Tradestation, Ameritrade
Favorite Futures: ES, Gold, 10 Yr
 
rahulgopi's Avatar
 
Posts: 1,640 since Feb 2014
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creating fake trades / spoofing and let HFT algos chase that is legal when you are a market maker. Not so when you are a retail player .

Spoofing tactics
It goes on to allege that Mr Sarao used a computer-based algorithm to essentially pretend to create - or 'spoof' - sell orders, making it appear that there were multiple traders wanting to take a downward bet on the market, when in fact there were none.

The prosecuters accused Mr Sarao of using an automated trading programme to execute the scheme, which they described as "dynamic layering," involving placing a significant number of large volume sell orders at different price points at the same time to make it appear as if substantial supply existed.

Mr Sarao is then alleged to have modified the orders again and again to ensure they were close to the actual market price, only to then cancel them before they were executed.

He then profited from the turmoil which ensued through a series of well-placed bets on the futures market, it is alleged, selling futures contracts and buying them back at a lower price. Some of his actions happened within a millisecond of each other, the FBI says.

The charges have only came to light now, however, following his arrest by the Metropolitan Police on April 21, working in conjunction with the British regulator, the Financial Conduct Authority.

Mr Sarao, who worked alone from his west London home, remains in custody, awaiting extradition to the US on the charges. A US judge has issued an order freezing the assets of both Mr Sarao, and his trading company.

https://www.telegraph.co.uk/finance/financial-crime/11553433/British-trader-Nav-...flash-crash-in-2010.html

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