The uneven playing field

How many 'busted' trades? They don't know!

It seems like they should, but it's not surprising that they don't.

Many of the trades that Goldman Sachs erroneously placed through the New York Stock Exchange, the CBOE and Nasdaq have been or are in the process of being cancelled by the exchanges.

I'm pretty sure that if I made a bad trade then just told these folks that it was all just a big mistake, I'd just be out of luck.  After all, if I go bankrupt, it won't cause a financial meltdown.  But I think I deserve the same consideration as Goldman Sachs (GS) does.

It seems odd, to say the least, that this kind of information is unavailable. It means that we can't answer some basic questions about the frequency and fairness of trade cancellation.

The fairness question is important. Smaller market players are very suspicious that big traders-Wall Street banks and larger hedge funds-are granted cancellations regularly, while others just get ignored. One trader told me he had tried to have trades cancelled a few times but never received satisfaction.

So, I guess I'm not alone.

"Anyone but Goldman would have just had to eat the loss," another trader said.

Well, I suspect there may be a few other select players that get special treatment.  The market is rigged, end of story.  The best a small investor can do is to avoid making the same mistakes that the big traders can make and get away with, and to be aware that the playing field is, in fact, uneven.

Let's make stock trading more personal

Goldman Sachs technical error causes erroneous U.S. option trades

Goldman Sachs said in a statement the firm does not face material loss or risk from the issue.

But then, later in the article:

Potential losses could range in the millions of dollars, the source said, but it was unclear just how many transactions were involved and what any final cost would be.

Yeah, our markets work just fine.  So, somebody makes a mistake, or in this some software malfunctions, and apparently, somebody else ends up the loser.  Either that or millions of dollars in losses are immaterial to Goldman Sachs (GS).  Regardless, I do wish the exchanges would ban automated trading, or at least put a requirement to actually hold a position for more than a fraction of a second.  Or even better, just return to the old days when traders stood on a street corner shouting out buy and sell orders.  It would make the whole stock trading business a whole lot more personal.  And, the exchanges could sell tickets to spectators.  I'll bet that business would be great, especially if the exchanges allowed disagreements to be resolved through physical means, as opposed to the current "my computer is closer to the exchange than your computer so I win" nonsense.  So, in case I haven't been clear, I don't like automated trading.  I don't like reading that some people lose money because other people failed to control their own software.  And yes, I realize that this article never directly said that any of that happened and I'm reading between the lines some.  But if I didn't do that then I wouldn't have anything to say about anything.