In our technologically-growing society where the reliance on computers has grown enormously, even investors have climbed onboard. This has taken the form of algorithmic trading which uses sophisticated mathematical formulas. These complex formulas and models are then used to automate trading on a “flash” speed basis. The goal of this type of trading is to be able to trade almost instantaneously on strategies designed to make bigger profits.
With the use of high-frequency trading systems, algorithmic trading firms using computer programs can decide to buy or sell on an exchange quickly and in volume. In this manner, tens of thousands of trades can be initiated in seconds based on the formula’s preset conditions. These conditions include stock prices and certain market circumstances. The formula may dictate how many shares to buy or sell when a stock reaches a certain price which is all done automatically.
While algorithmic trading may have made trading more cost-effective and efficient, it also has risks that can lead to catastrophic results if counter-parties to traders do not fulfill the duties owed to investors. A simple error in the computer program which can affect thousands of trades in seconds can translate into the loss of millions of dollars.
Counterparties, like broker-dealers, too often do not fulfill their duties owed to such professional traders. Broker-dealers themselves may take contrary positions to such professional traders, or even spoof trades. Complex computer tools and programs used by unscrupulous traders for market manipulation can result in such activity as “spoofing.” Spoofing occurs when large trades are entered and then quickly canceled to manipulate prices.
At Levin Law, our Miami professional trader claims attorneys understand the sophisticated mechanics of today’s traders and markets. If you have lost significant funds as a result of a broker-dealer, execution broker, bank, hedge fund, other financial institution, or contractual counterparties breaching the duties owed to you as a professional investor, we may be able to recover those damages caused to you. Find out what your legal options are in recovering those funds.
Our attorneys have secured millions of dollars in financial recoveries for defrauded investors. Let us put our extensive skills to work for you.