Well I am not sure how in depth I need to go on this topic, if you have turned on your TV today you likely know what I am talking about. A group of traders on reddit have changed the trading game. They have targeted hedge funds shorting massive positions and succeeded. Lets take a look at the stock that started it all. Game Stop rose from about $20 a share to over $480 in 2 weeks... This bled into blockbuster, AMC, blackberry, and more.
In a successful move to force price back down, brokers like Robin Hood and Interactive Brokers stepped in and either halted trading on these stocks or refused to submit orders for them.
The reason I am talking about this as a commodity broker and trader is today, I believe, we saw this move into the commodity market, specifically silver. As soon as the stock market opened at 9:30 AM EST silver was up 6% and over 27 in a matter of minutes. Things like this are all over twitter.
Now this was out before the stock market opened. AG, a miners stock for silver opened well above the close and eventually also had trading halted. With these stocks, they halted buy orders but allowed people to sell, literally forcing price back down as your only option was to sell. Lucky for us, the commodities market cannot halt trading the same way, although there are circuit breakers that can get triggered that limit moves.
You may remember our post from 1/8, 12,000 gold contract dump, where we explained how bullion banks dumped 12,000 contracts at 3 AM in the morning to force price back down in metals when we had been making good money on the trade. Obviously it was no coincidence this was done at 3 AM, that is when trading volume is lowest so price is easiest to manipulate. These banks and large companies can freely manipulate price while we, the casual traders can only hold 200 contracts on one side of the market at once. That is an CFTC regulation which was put in place to prevent price manipulation... By us, the casual traders while these corporations can hold thousands.
Wall street does not know how to react to what is going on in the stock market. Hedge funds are calling brokers and telling them to stop submitting orders, CEO's of these companies are going on news networks and berating day traders. These companies are losing up to 20% of their value from what I have read which equates to multiple billions. It is something I never imagined I would see and is really exposing how the market is set up for so few to succeed. Hopefully, this creates transparency in the the commodities market at a large scale, creating transparency which will allow a level playing field between small traders like us and large companies and banks.
The Speculation page is used for educational purposes and to talk about our opinion on trades and what is going on in the market. All trade recommendations are made in "The Pit". This is also a blog page where you can ask questions, post your thoughts, or ask for help. Be sure to use an anonymous name. If you have any questions feel free to reach out to us via email.