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Internet Bots: Anatomy of a Stock Selling Frenzy (hothardware.com)
24 points by iamelgringo on Sept 12, 2008 | hide | past | web | favorite | 11 comments



The same thing could happen with people, someone finds an old story but doesn't realise it's old, tells a few people, starts a rumour and then traders sell off stock. At least with an automated system you can improve the algorithms.


Yup - like the occasional trader that misses a decimal point and sends a stock whirling off in the wrong direction (most trading systems have mechanism to prevent this, but it still crops up now and then).

Whilst this is an unusual case - 99.99% of the time the access and currency of information available today actually makes for a much improved market.


Best line from the article:

"a non-detail-oriented securities analyst summarized the article (apparently without reading it first) and uploaded the summary to Bloomberg."

Should read: "a lazy and now-unemployed securities analyst..."


There has been no report of the analyst in question being fired.


"Automated trading systems start a massive stock self off based on the old headline..."

Quant firms played a very little role in the selloff. It was retail and some institutional investors seeing the headline come across on their Bloomberg terminal and immediately start dumping shares.


It probably accentuate the sell-off. Trading signals were probably fired after the initial drop-off.


On that subject (more or less): Can anyone recommend a good, reputable online stock brokerage?


I use http://www.thinkorswim.com for mutual funds since you get 3 free mutual fund trades a month.

I use http://www.zecco.com for my standard stock trades as you get 10 free a month. Definitely not the most fully-featured broker, but it works and it's hard to argue with no-commission trades.


Go with the cheapest - Interactive Brokers

Damn I hate their security device though. It's kind of irritating to have to enter the security codes every time i want to make a trade. And if you're a frequent trader, it'll get on your nerve (on the flip side, it prevents over-trading)


Good:

- Thinkorswim [the one I use]

- Interactive Brokers

- OptionsExpress

- eSignal

- NinjaTrader

Bad:

- etrade

- scottrade

- fidelity


I used to work at Banc of America Investment Services before I quit to go back to school. I can safely say that I would never do business there. Unless they have cleaned up their act in the ten months I haven't worked there, the place must still be a mess.




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