Quote from: arepo on May 01, 2013, 12:58:20 PM

Quote from: elux on May 01, 2013, 12:19:22 PM

2: Will tend to play out in a predictable direction. (To the manipulator, yet unpredictable from TA),

sticking point:

i opened this thread with the hypothesis that "TA-appropriate moves" maximize the profit/risk equation. you've brought up many good points why this may not be the case.

however, the quoted point above speaks to a very important feature of this problem, that is the feature of the information that the players have.

we all can agree, i hope, that the manipulator does not know, with any certainty, how the market will react to his attempt at manipulation.
the best he can do, just like every other participant, is to guess. doesn't this alone invalidate all theories of direct price manipulation?

Doesn't this alone invalidate all theories against direct price manipulation:

Quote from: Time Magazine

At 1:07 p.m. on Tuesday, the Twitter feed of the Associated Press told us that Barack Obama had been injured in an explosion at the White House.

The tweet was fake the product of a hack but given the events in Boston last week, the news spread like wildfire, garnering more that 4,000 retweets.

The AP quickly addressed the situation, suspending its Twitter account, and alerting readers through associated accounts that the tweet describing an explosion at the White House was the result of a hack.

No harm, no foul, right?

Well, not exactly. According to the Financial Times, that one tweet sent shock waves through the stock market
causing the S&P 500 to decline 0.9% enough to wipe out $130 billion in stock value in a matter of seconds.

Source: http://business.time.com/2013/04/24/how-does-one-fake-tweet-cause-a-stock-market-crash/

I would bet that the people behind this trick correctly anticipated the direction of the reaction. And also that there would be a reversal.

I would bet against them knowing with certainty the extent of the reaction or the precise timing of the reversal.

I would bet that what small edge they did have (such as advance knowledge, timing) was sufficient.

You can say "but you don't know that" and you'd be right. And you'd be a right fool too. Wink