According to reports, computers at some high-frequency trading outfit got misprogrammed last week, triggering wild gyrations in several major stocks. Since these screw-ups account for a ginormous 17% share of all trades on the NYSE and NASDAQ, making the firm the largest trading operation in our equity markets, the debacle is reminiscent of the infamous May 2010 Flash Crash that drove Mr. Irving to create The MacDougal Post the very next month, and our subscribers have every right to wonder why securities laws haven’t been reformed to call for the death penalty in cases like these by now.
Our position remains unchanged. Many savvy investors had been taught to use market orders when buying or selling liquid securities, preventing mobsters from ripping these customers off by trading against them. Effective May 6, 2010, all that changed. On Day One of the post Flash Crash Era, the enlightened investor switched over to limit orders, placing them at or inside bid or asked, basically whatever price seems most likely to get the trade done, which is all you’re trying to accomplish with market orders anyway.
Rather than fume over state-of-the-art financial violation, we’re just going to remind loyal readers, once again, what the latest updates in Wall Street depredation mean to you: This new high-frequency technology has taken the old-time floor specialist out of the game, adding a brand new risk that renders the market order obsolete. He isn't there to watch over us anymore.
Place limit orders yourselves. Just like MacDougal. Don’t get snakebit by whatever this horror is that now lies underfoot.
