If that got you upset, this idea will make your head explode:
If you figure out what a competitor's algorithm is programmed to do, and you can buy/sell to setup conditions where you know it will respond a certain way, what's to keep you from repeatedly manipulating the market to take advantage of their algorithm?
Keep in mind that if you "short" a stock, you can make money with it going down...
It's a big boys game, for sure- there are people lined up to take advantage of you if you're not understanding all the rules.
Originally Posted by j427x
i am thinking it would not take much to set off a panic or a bull-rush.
whoever gave this news story to PBS left out that such computer trading systems could manipulate stock prices either up or down and a malfunction or software problem might cause a panic.
i suspect right now the program traders are pushing the market UP--but what is going to happen WHEN they decide to take the cash and run?
everybody else is going to get holding the bag.
Look up "Black swan event"... It happened On May 6, 2010 - and will happen again- the markets have controls in place (now) that will halt trading after a runaway starts to limit the damage.