[throwaway183839]

The market clears any matching orders in effectively zero time (that is, it runs its matching algorithm to clear the book before it allows any new quotes to enter).

After an order is matched, you can't cancel it except in exceptional circumstances (for example, you mistakenly entered an order very far from the bbo - in that case, with the cooperation of your broker and the counterparty to your trade, you may be able to unwind it).

However before the order is matched you are free to cancel it if you decide you no longer want to trade at that price (for example, you see some change in the fundamentals of the stock that causes you to no longer want to buy, or simply that the price moves in such a way that a buy/sell at your original price no longer looks like good value).

[mapt]

So if I offer a trade, and then withdraw the trade because I decide I don't like the idea anymore (or 'any other reason')... that's legal. And routine to do on microsecond timescales.

But offering a trade, and then withdrawing the trade manually a few seconds later because I never intended to execute the trade... that's not legal?

What was the original rational for creating this class of thoughtcrime? Why does it criminalize intent, while the action is perfectly routine, and the outcomes are the same either way? There is, after all, the risk of someone actually calling your bluff and buying your sell order, or selling into your buy order, which is cleared instantly... so where's the fraud?.

Doesn't HTF presuppose that we are hard-coding this behavior, this tactic, into the trading algorithms of automated traders?

[gd1]

>So if I offer a trade, and then withdraw the trade because I decide I don't like the idea anymore (or 'any other reason')... that's legal. And routine to do on microsecond timescales.

Yes that's right. So quickly you may as well assume that they are updating the price they are willing to buy/sell continuously in realtime. Which is the idea. And because they are updating their prices continuously and accurately, they can keep the gap between those two prices as small as possible. For some bizarre reason, this is the only field in all of technology where HN contributors get freaked out by this. Name a control system that doesn't update its outputs frequently.

>But offering a trade, and then withdrawing the trade manually a few seconds later because I never intended to execute the trade... that's not legal?

Yes that's right. Markets work on trust, if you don't actually want to buy/sell what you're claiming you want to buy/sell then you are lying. More importantly, if you don't want to trade, what are you doing putting the order in? What does that leave as your motivation? Manipulation, that's what. Which is illegal. It's very hard to define market manipulation, but that's just about the easiest way I can think of - can you think of a simpler definition? They have to settle on some way of describing it, and it's not unusual for crimes to be defined by intent.

>Doesn't HTF presuppose that we are hard-coding this behavior, this tactic, into the trading algorithms of automated traders?

I don't follow

[FireBeyond]

"Markets work on trust, if you don't actually want to buy/sell what you're claiming you want to buy/sell then you are lying."

No, that's patently not true. If you are UNWILLING, or UNABLE, to execute a trade when matched, then you are lying.

Plenty of people "don't actually want" to buy/sell, every day - using that phrasing, you could point to people who are forced to cover shorts or dump a stock as it plummets to recoup some of their losses.

"I don't want to sell this stock at this price, but I WILL" should never be considered fraud - for the very least reason that it opens a deep rabbit hole into a form of thought crime that really, do many market participants want opened - when they're asked to explain, with a straight face and credulity, what their market strategies are really intended to do.

[gd1]

You seem to be mixing up different levels of wanting and intention. I may not want to eat my brussel sprouts for dinner, but when I poke them with a fork and raise them towards my mouth I am intending to eat them. Not pull them away at the last second. I'm sure no one enjoys dumping a stock as it plummets, or wants to dump a stock when it plummets, but when they are actually carrying out the process of selling that stock, then they do want the trade to go through. It is their intention to successfully complete the sale of the stock. That's what we're referring to.

[kasey_junk]

> "I don't want to sell this stock at this price, but I WILL" should never be considered fraud

A) it isn't fraud, it is order spoofing, which is precisely defined to be based on intention.

B) lots of our legal system is based on intention. It is a common aspect, not a rabbit hole.

[mapt]

Every single trade is market manipulation. Actions have effects, regardless of intent.

[StavrosK]

Because there may be a request in the system already for the price you offered, which means that your trade will go through immediately when it gets offered, and you won't be able to take it back, even in microseconds.

If any amount of time passes, it's considered to just "be sitting there", so you can change your mind and cancel it. Microseconds isn't the same as no time at all, when you can pre-issue buy or sell orders that will get filled at the very instant a matching order goes in.