Here is an interesting article by Nigam Arora @ Marketwatch.com
http://www.marketwatch.com/story/will-hunt-and-destroy-algorithms-get-apple-2013-01-15
The article is actually on Apple but gives a nice view on "Hunt and destroy Algos". A small part below
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In stock trading, twin practices have coexisted for ages. First, a large number of investors enter stop-loss orders to protect themselves. Second, such stop-loss orders become sitting ducks for some professionals.
In the past, it was a common complaint that market makers and brokers tended to run the stops. These days hunt-and-destroy algorithms have evolved to run down the stops. Such algorithms simply try to guess where the stops are grouped, and if stops are hit, the algorithms take advantage, first, by short-selling and then buying to cover. The complexities are overly simplified here to illustrate the point.
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http://www.marketwatch.com/story/will-hunt-and-destroy-algorithms-get-apple-2013-01-15
The article is actually on Apple but gives a nice view on "Hunt and destroy Algos". A small part below
--------------------
In stock trading, twin practices have coexisted for ages. First, a large number of investors enter stop-loss orders to protect themselves. Second, such stop-loss orders become sitting ducks for some professionals.
In the past, it was a common complaint that market makers and brokers tended to run the stops. These days hunt-and-destroy algorithms have evolved to run down the stops. Such algorithms simply try to guess where the stops are grouped, and if stops are hit, the algorithms take advantage, first, by short-selling and then buying to cover. The complexities are overly simplified here to illustrate the point.
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