“Mysterious and possibly nefarious trading algorithms are operating every minute of every day in the nation’s stock exchanges. What they do doesn’t show up in Google Finance, let alone in the pages of the Wall Street Journal. No one really knows how they operate or why. But over the past few weeks, Nanex, a data services firm has dragged some of the odder algorithm specimens into the light.”
“‘When I pulled up that first chart, we saw ‘the knife,’ we said, that’s certainly algorithmic and that is weird. We continued to refine our software, honing the algorithms we use to find this stuff,’ Donovan told me. Now that he knows where and how to look, he could spend all day for weeks just picking out these patterns in the market data. The examples that he posts online are just the ones that look the most interesting, but at any given moment, some kind of bot is making moves like this in the stock exchange.”
