| We continue to learn more and more about our friend in the UK causing the flash crash from his parents' basement Mr. Nav Sarao. Depending on who you want to believe, Mr. Sarao is not what would be considered an HFT in the normal sense. In is own words:
"I am an old school point and click prop trader. To this day I am still using the mouse to trade. That is how I trade, that is how I always have traded, admittedly very, very fast because I have always been good with reflexes and doing things quick. My trading is for the most part very short term and for very small profits, a large proportion of my profits are 1 price movements, which in the eminiSP's case would be a quarter of a tick. I have also taken longer term positions In the past and my biggest day was actually made for the most part whilst I was sleeping!
I am a trader who changes his mind very, very quickly, one second I am prepared to buy the limit of 2,000, the next second I may change my mind and get out. This is what is unique about my trading I trade very large but change my mind in a second. This is why MF Global had to speed up their systems for me, yes they have other hedge funds etc trading 2,000 lots, but they didn't have anyone buying 2,000 and getting out seconds later and then going short a thousand ! All this traded volume was something that MF Global's system was not prepared for and I remember at the start their system was too slow for me. And all this is done with my hand and a mouse. What makes me change my mind? Well it could be anything, a move in one of the other markets that I look at, a chart set up that I suddenly remember from my 11 years of trading, or simply the WAY I was filled made me doubt my position, or for the large part it is just my INTUITION." As most of you know, I traded in the same pit as where this latest battle is being wrought (when there were really pits). If you want to believe Mr. Sarao (and I tend to), he is doing nothing wrong. There is nothing wrong with "gaming the market". This has been done since the inception of the Board of Trade. You bid things sometimes to buy something and other times, you bid things in order to sell it to the people who jumped on board. Intent is not what is at issue, what is at issue is the validity of the bids or offers one puts into the market. For example, let's say the ES is trading 2000. I really want to sell it at 2001. I scream out to the pit that I am 2000.50 bid for 500 contracts! Hopefully, someone who really wants to buy it then jumps in front of me and bids 2001 and I turn around and sell it to them. What should not happen is that when I yell out my 2000.50 bid, someone tries to sell it to me and my bid is not honored. Or they get one lot filled. That was a good way to get people not to trade with you ever again. Now, that is precisely what happens in this HTF environment. Bids and offers come in and disappear as soon as you try and hit them because the speed of their algos allow them to slink away before any human can act on it. I think that what happened here is that Mr. Sarao found out a way to "game the gamers" and that just cannot stand. He was not funneling millions of dollars to the powers that be to allow the ruse to continue. He needed to go. As far as Mr. Sarao causing the crash:  If you are telling me that the legitimate HFTs take 2:30 to react to one guy in the basement's market activity and then send the market down 6%in minutes, then we really are in trouble. Trade well and follow the trend, not the perma-bull OR perma-bear "experts." Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia. | 
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