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is this insider trading?
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is this insider trading?

  #11 (permalink)
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RM99 View Post
Insider trading is insider trading, doesn't matter what the instrument class is.....

The essence of the concept is that someone is an "insider" with information not available to the rest of the market. It doesn't matter if it's a politician with access via their station, a bureacrat with access because they manage relevant reports and information dissemination, or a company officer because they have intimate knowledge about a company.

Whether it's a politician who knows that a bill is likely to be squashed or approved (that benefits or harms particular companies or markets), whether it's a judge that about to rule on a suit (that has an effect on commerce or companies) whether it's a bureacrat (like those at the Department of Labor or the FDA).

We're more accustomed to hearing about insider trading with equities, where company officers know of relevant changes that affect a company's stock valuations....whether it's a merger, an approval/rejection of a key drug going through trials, the award (or loss) of a contract for making component parts on the next Iphone, etc.

The essence of insider trading is that there's a natural market inefficiency where information is not universally available.

I'm glad that people are waking up to the idea that politicians are in just as much a position to commit insider trading as CEO's or company employees (same with judges and bureacrats).

And I'm convinced that it goes on with equities as well as commodities and virtually any manner of instrument class.

Thats the nature of a price discovery market (i.e. commodities), Information is communicated instantly through price, there are no "insiders"

But either way, I can't prove that it wont happen, you can't prove that it will. It's just speculation on speculation..... And a pointless diversion to the OP's original question.

In the chart above there may or may not be insider trading, but you darn sure can't see it, even more so You can't bet on the fact that It will show up before news. CL was just coincidentally moving up prior to the release of news, which drove it up further.

"If I agreed with you, we'd both be wrong."

Last edited by addchild; July 27th, 2012 at 12:40 AM. Reason: spelling
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  #12 (permalink)
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ok, I think that it doesn't matter whether or not it was insider trading, what matters is the frequency and accuracy of this kind of setup before news.

1. price seemed to go one direction in earnest,
2. but all of sudden it stopped and appeared to be reversing at a key S/R level.

granted, this happens all the time, but the key difference is that yesterday it happened a few minutes before news.

now, whether or not a particular reversal is true is difficult to judge. but what I'd like to find out is, if "1" & "2" happens before news, does it make the reversal more likely to be real? and if so, how much of an advantage can we expect in terms of win/loss ration and R:R?

I don't have access to enough historical data to make a judgement on this setup. does anybody have enough data at hand and who wouldn't mind to help?

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  #13 (permalink)
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iPlayGames View Post
ok, I think that it doesn't matter whether or not it was insider trading, what matters is the frequency and accuracy of this kind of setup before news.

1. price seemed to go one direction in earnest,
2. but all of sudden it stopped and appeared to be reversing at a key S/R level.

granted, this happens all the time, but the key difference is that yesterday it happened a few minutes before news.

now, whether or not a particular reversal is true is difficult to judge. but what I'd like to find out is, if "1" & "2" happens before news, does it make the reversal more likely to be real? and if so, how much of an advantage can we expect in terms of win/loss ration and R:R?

I don't have access to enough historical data to make a judgement on this setup. does anybody have enough data at hand and who wouldn't mind to help?

You can download the data off the elite section, but it would be an awful lot of work to isolate all the relevant data, for what will likely lead to a coin toss...

"If I agreed with you, we'd both be wrong."
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  #14 (permalink)
Fortitudo et Honor
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addchild View Post
Thats the nature of a price discovery market (i.e. commodities), Information is communicated instantly through price, there are no "insiders"

But either way, I can't prove that it wont happen, you can't prove that it will. It's just speculation on speculation..... And a pointless diversion to the OP's original question.

In the chart above there may or may not be insider trading, but you darn sure can't see it, even more so You can't bet on the fact that It will show up before news. CL was just coincidentally moving up prior to the release of news, which drove it up further.

I'm sorry, you're just wrong. There are always insiders to EVERY market. At various levels. The price is simply a reflection of the market's valuation of fair value (commodities) which is nothing more than input from supply/demand and then an add on adjustment for exchange rates.

Again, if Ben Bernanke call his buddy the Crude trader the night before his press conference and says "hey, tomorrow I'm going to announce QE3" that's not insider trading? You don't think that's a market inefficiency? It's the very definition of a market inefficiency, some of the market has all of the available information and the rest of it has only partial information.

It's the same concept as a CEO who has intimate knowledge about the current state or future of his/her company. When anyone has access to information that others don't, that's called "insider" information.

When someone on the FDA board discovers that a current drug that Pfizer or Merck is running through trials, and it has hit all green lights so far and the market thinks it's all but a sure bet to be approved, but hits some final snag that's going to tank the approval, THAT is insider information.

When someone steals a prototype Iphone, THAT prototype is worth $Billions.....because they can gut it, discover which component parts are made by which companies (who stand to profit significantly) and then go long those companies and go short the other companies who were competing for the same contracts.

Any time there's not universal dissemination of information, there's insiders.

You can do any simple search history of the performance of politicians in the stock market...which is what prompted recent legislation to further solidify the laws against politicians from trading with exclusive information.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #15 (permalink)
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RM99 View Post
I'm sorry, you're just wrong. There are always insiders to EVERY market. At various levels. The price is simply a reflection of the market's valuation of fair value (commodities) which is nothing more than input from supply/demand and then an add on adjustment for exchange rates.

Again, if Ben Bernanke call his buddy the Crude trader the night before his press conference and says "hey, tomorrow I'm going to announce QE3" that's not insider trading? You don't think that's a market inefficiency? It's the very definition of a market inefficiency, some of the market has all of the available information and the rest of it has only partial information.

It's the same concept as a CEO who has intimate knowledge about the current state or future of his/her company. When anyone has access to information that others don't, that's called "insider" information.

When someone on the FDA board discovers that a current drug that Pfizer or Merck is running through trials, and it has hit all green lights so far and the market thinks it's all but a sure bet to be approved, but hits some final snag that's going to tank the approval, THAT is insider information.

When someone steals a prototype Iphone, THAT prototype is worth $Billions.....because they can gut it, discover which component parts are made by which companies (who stand to profit significantly) and then go long those companies and go short the other companies who were competing for the same contracts.

Any time there's not universal dissemination of information, there's insiders.

You can do any simple search history of the performance of politicians in the stock market...which is what prompted recent legislation to further solidify the laws against politicians from trading with exclusive information.

Get off your soapbox and prove it.

"If I agreed with you, we'd both be wrong."
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  #16 (permalink)
Fortitudo et Honor
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addchild View Post
Get off your soapbox and prove it.

Get off yours and prove it doesn't happen....see how valuable that is?

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #17 (permalink)
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RM99 View Post
Get off yours and prove it doesn't happen....see how valuable that is?

Well my reasoning is a fairly basic economic concept that all available information is disclosed through price, if someone has information and trades on it, it ceases to be inside information.

Your argument is conjecture. (borderline conspiracy)

I'm not saying it doesn't happen, obviously humans are inherently selfish and are going to bend and break rules.

I'm saying that when trading commodities it doesn't matter.

"If I agreed with you, we'd both be wrong."
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  #18 (permalink)
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No offense but this is a bit comical. The specimen being used here is a 1 minute chart of the pre-market action where price was simply making a pullback to a basic trend line and moving average. How in the world would this be considered market manipulation? This is normal market activity! Besides, the market sold off during RTH.

As far as insider info goes, just because someone knows something before news is released does not mean they're going to move the market! Usually if someone has inside info, they're going to be small and discreet don't you think?

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  #19 (permalink)
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There are some "government reports" that are made available "early" to some people, through subscription services. I cannot recall all the specifics because I do not use them, but I am thinking that for example you can be a member of the Dow Jones wire service and get some reports 3 minutes earlier than they are made publicly available over conventional wires.

That is just an example.

I do not consider this to be insider trading, because anyone can just sign up for the service and take advantage of this "service".

In the HFT webinar (if I recall) it was discussed how some institutions/firms are hitting government websites so hard (hits) at the time of certain reports that not only do they get the numbers first, but they also purposefully slow down the response time of the web server so that everyone else has to wait a few more milliseconds, giving them an edge.

I would not call this insider trading either.

Insider trading is when Congress is made aware of certain events surrounding a publicly traded company, and then they go home and call their broker and modify their positions based on their inside information. And it's not even illegal.

Mike

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  #20 (permalink)
Fortitudo et Honor
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Private Banker View Post
No offense but this is a bit comical. The specimen being used here is a 1 minute chart of the pre-market action where price was simply making a pullback to a basic trend line and moving average. How in the world would this be considered market manipulation? This is normal market activity! Besides, the market sold off during RTH.

As far as insider info goes, just because someone knows something before news is released does not mean they're going to move the market! Usually if someone has inside info, they're going to be small and discreet don't you think?

I'm not arguing about moving the market, I'm saying that the game is rigged for some folks. By the time the news outlets report the UE report....there's any number of people who've already had that information available to them in order to make an advantageous decision about the market.

Whether or not they move the market (which can or can't be noticed) is a different debate.

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