Why Hedge Fund Managers Should Be Banned

[NeilSite + 1]

So, WTI is up almost $3/bbl in approx. 3 hours trading (closer to 6%), with RBOB up about $0.07/gallon.
Yes, I know about the 3-month "deal" Trump made with China at the G-20 meeting regarding tariffs.
Just so we're all clear, this is one of the biggest moves WTI has made in all of 2018 and it has nothing to do with OPEC+, elections, Brexit, EIA and API reports, etc.

Trump is doing this to appease his Saudi and Russian friends...see, neither wants a production cut--especially considering Trump gave waivers to 8 countries to continue buying Iranian oil.
The Saudis and Russians want more market share, and never trust the Russians on any price point as they always contradict themselves (e.g., "happy with $60 oil on Brent" but then call for production cuts the very moment WTI falls below $50). This way, the price of oil is stabilized for both American producers as well as OPEC+ without needing any production cuts, just temporarily remove tariffs and WTI is now more than $4/bbl above its recent low of $49.47.

But who actually is doing all of this? Approx. 83% of all trades are performed by 'algos' (algorithmic trading on behalf of hedge fund managers).
Meaning, the price of the world's most actively used commodity is ultimately determined by a small group of extremely wealthy people.
They don't care if WTI is $1 million/bbl as long as they get price movement...they are irrelevant to the fact that 90% of the world must instantly pay more for the same stuff.
It's similar to a restaurant where the privileged elite few eat a king's ransom, make an enormous mess, then get up and have everyone else clean up and pay for it.

But, why do away with 'algos'? Because oil bear vs. oil bull or consumer vs. producer these hedge fund managers will ruin it for any of you and FAST.
Futures trading may be a zero-sum game but it is not a fair trade against these guys...they have connections directly to the NYMEX and CBOT.
They hire mathematicians and computer programmers from MIT, Stanford, etc. to create these algorithms. What are you using? Comcast? Time Warner?
And, of course, they have way more money than you do, so they are trading with far more contracts at any given time than you.

I was up late trading one night last year when a "flash crash" occurred with WTI and prices plummeted almost $2/bbl in less than 2 minutes...well, that's great if you were holding a short position! Or, is it? Because by the next day, prices were already up about $1/bbl above what they were before the flash-crash.

Then, who benefits? Mostly only they do. But don't forget the NFA (National Futures Association): They get $0.01 from every trader for every contract traded.
WTI usually trades at least 600k contracts on front-month contracts per day, so that is $6,000 from just 1 contract month in a single day!
The NFA craves VOLUME the same way 'algos' craves VOLATILITY. Remove hedge fund managers from the game and the NFA would lose their minds.

I refuse to pay more as a consumer than I should just so hedge fund managers can profit. I say, pass regulations against algorithmic trading so the rest of the world can deal with prices that are far more justified. Thank you for reading!
 

[A/Plague + 50]

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Edited December 14, 2018 by A/Plague

[cbrasher1 + 272]

up is good, especially for those of us out here working 😁 maybe due to rumors of cuts and possible breaks in trade war tensions