How Dark Pools & High Frequency Traders Effect Stocks & Options

Basics For Beginner Investors & Traders

The two most dominant Market Participant Groups in the Stock and Options Markets today are Dark Pools and their counterpart the High Frequency Traders. Dark Pools is an ominous and dubious title for the giant Mutual and Pension Funds venues, where these giant Institutions buy and sell millions of shares of stock. Dark Pools are a benefit to both Independent Investors investing for their retirement, and for Retail Traders who are trading stocks for monthly income.

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Dark Pool orders are controlled bracketed orders which control price in such a way that the footprint of these giant Institutions which are long-term investors is easily identified on a stock chart, even if an Independent Investor or Retail Trader is new at reading stock charts. Dark Pool order systems are automated, which alters Candlestick Patterns.

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High Frequency Traders are not individual traders. They are companies that have written computer algorithms. These are designed to search through millions of news articles to find news alerts, or search the mega order flow of millions to billions of orders to find anomalies in order flow that then trigger an automated millisecond trading activity. They can trade as many as 90,000 orders in one minute. The Independent Investor or Retail Trader order fill requirement must be executed by the broker within one minute, to one and a half minutes.

High Frequency Traders have been in the news, but most Independent Investors and Retail Traders are severely misinformed as to their role and true risks which they created. In addition Independent Investors and Retail Traders do not understand the role and benefits of the Dark Pools. Watch the Balance of Power webinar about Dark Pools and High Frequency Traders.

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Independent Investors and Retail Traders are often misinformed or uninformed about the most influential Market Participant Groups buying and selling stocks and options. This causes them to be at higher risk of whipsaw trades, poor entries and exits, weak run action, buying too late into a stock, or selling at the wrong time.

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Trade Wisely,
Martha Stokes CMT

Chartered Market Technician
Instructor and Developer of TechniTrader® Stock and Option Courses
TechniTrader DVDS with every course.

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