Just finished reading a book I would encourage all
Post# of 98045
Just finished reading a book I would encourage all investors to check out. I will say it is just a little biased (nevermind, completely biased, lol), but the authors do a pretty good job explaining some of the problems in the markets. The book is called "Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio". It is available on Amazon for $22.98 and Barnes & Nobles for $23.10; however you can save by buying the eBook.
The book discusses High Frequency Trading and some of the problems retail and even some hedge funds are having to deal with HFT. Profits for HFT firms has been on the decline ever since the Flash Crash in 2010, thus it is likely the negative exposure towards HFT is causing some of the decline, which is IMO is good for traders and retail investors like you and me.
Many of us talk about short selling and naked short selling being a problem in OTC stocks, but you will be surprised some of the things many traders and investors just assume is commonplace even though the practices are costing them money and should be illegal. Things like MM's taking out stop loss orders, getting filled at a higher price than is showing on the ask price (i.e. you get the limit price you set, but still should have been filled lower, but the lower order was filled in dark pools for a HFT or hedge fund), and the one that happens to me all the time on heavily trading OTC stocks (i.e. pumps) when you place a limit order above the ask and the MM's immediately drive the stock price up to fill your limit orders and then bring down the price. These are just a few of the things mentioned in the book that irritates me and it is nice to read people in the know discuss these issues.
So that's my take on the book. I think those that read it will gain a better understanding of the markets. Learning what goes on will give you an advantage as you can better anticipate these things happening and try to do things that prevent them from happening (i.e. lowering your transaction costs).
Here is the book description as listed on Amazon:
The markets have evolved at breakneck speed during the past decade, and change has accelerated dramatically since 2007's disastrous regulatory "reforms." An unrelenting focus on technology, hyper-short-term trading, speed, and volume has eclipsed sanity: markets have been hijacked by high-powered interests at the expense of investors and the entire capital-raising process. A small consortium of players is making billions by skimming and scalping unaware investors -- and, in so doing, they've transformed our markets from the world's envy into a barren wasteland of terror.
Since these events began, Themis Trading's Joe Saluzzi and Sal Arnuk have offered an unwavering voice of reasoned dissent. Their small brokerage has stood up against the hijackers in every venue: their daily writings are now followed by investors, regulators, the media, and "Main Street" investors worldwide. Saluzzi and Arnuk don't take prisoners! Now, in Broken Markets , they explain how all this happened, who did it, what it means, and what's coming next. You'll understand the true implications of events ranging from the crash of 1987 to the "Flash Crash" -- and discover what it all means to you and your future. Warning: you will get angry (if you aren't already). But you'll know exactly why you're angry, who you're angry at, and what needs to be done!
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