This is, I think, at the heart of the problem, and vastly unreported by mainstream media. In short I encourage you to look up the “nasdaq whale” trade from this past summer 2020, of soft bank fame. Butchering the premise, algorithms (algos) front run Robinhood options. This is how Robinhood makes money, selling this access to investment firms. These algos cause a compounding effect with those Robinhood trades. When combined with the compounding effect of a “melt up” in a short squeeze (described elsewhere in this thread), the effects are enormous. I believe WSB redditors stumbled upon this unintentionally, but the market effects are demonstrated at scale with the Nasdaq Whale trade (and the Essex boys crude oil crash before it). Whether you believe this is “right” perhaps should be informed by whether you believe a market where the majority (>50%) of trades are executed by computer algorithms reacting to preceding market moves most likely executed by computer algorithms. If ever more algorithms compound each other ad infinitum, can’t the market be manipulated by an ever smaller number of market participants, their motivations however perverse?
