[stevejones]

It is supposed to be the case that you do not place orders on an exchange that you have no intention of executing. i.e. if you place an offer which you intend to withdraw then replace with a higher one the moment you detect interest in the offer then you are breaking the rules.

In general it's also pretty scummy to do it. Imagine a shop seeing you taking items from shelves at an advertised price and saying "Well that shows there's demand in these goods so we're raising the prices on everything in the customers basket before they get to the checkout."

[kasey_junk]

That is not at all true. It is perfectly legal and valid to place quotes at a price that you expect is valid and change them once interest is detected. This is a standard market dynamic and one that makes the markets work.

Your analogy is not all how HFT works. A better analogy would be a string of gas stations going down the highway. A tanker truck comes to the first one and buys all it's gas. Then the second one, and then the third. The manager at the third station calls the fourth and tells them to raise their prices. How is it scummy to do that, but not to buy up all the gas at what is clearly a too low price?

[VikingCoder]

> This is a standard market dynamic and one that makes the markets work.

I don't believe this is necessary to make markets work.

[harryh]

Forgot your mumbo jumbo evidence & logical reasoning! I believe what I believe and you can't stop me!

stomps foot

[VikingCoder]

Please don't be so rude, it doesn't add anything to the conversation.

There are many markets where you list a product for a price, and are legally bound to sell them at that price.

Those markets function, proving that withdrawing quotes is not necessary to make markets work.

[harryh]

What markets are those? I can think of no markets in which you're not allowed to change the price of whatever goods you're selling.

[VikingCoder]

Best Buy runs a flier with a price. You walk in, and Best Buy tells you they're not selling that product at that price... but they do have it in inventory at a higher price.

You drive up to a gas station, listing one price on its sign. By the time you pay, they've changed the price.

You see a house for sale. You make an offer, at that exact amount. There are no higher competing offers, but they want to back out.

You have legal recourse in each of those situations.

[gd1]

Huh? The rule is you can't place orders that you have no intention of executing at the time you place them. You're perfectly entitled to change your mind afterwards, or adjust your price as new information becomes available. You just can't place orders when it is your goal to not have them execute, and that was your goal before you even sent them.