Welcome to my Dark Pools Secrets Review.
I recently received email invitations to check out this investment research service, so I decided to take a closer look at it.
I composed a detailed and unbiased review of Dark Pools Secrets by Stefanie Kammerman, which includes a quick overview of it, how it works, pros, cons, and a few other details.
Keep reading to learn more about it.
Meet Stefanie Kammerman
Stefanie Kammerman, aka The Stock Whisperer has trained over a thousand traders worldwide how to Day Trade and Swing Trade over the past 20 years.
She earned a BA in Psychology from FAU but decided to pursue her passion for the stock market. In 1994, she started out as an assistant trader at the prestigious Schoenfeld Securities. In 1996, she became the first female trader for Onsite Trading, winning the trader of the year award her first year.
She successfully ran a trading desk over the next few years teaching all the new traders the overnight swing system. Stefanie is also a published singer/songwriter with BMI, having placed numerous songs on some of the most popular television shows such as “Americas’ got talent,” and “American Idol” just to name a few.
She is the founder and managing director of The Stock Whisperer Trading Company, where she runs an online educational trading room called “The Java Pit”. She teaches her students by sharing her screen all day long with many audio meetings.
Her unique approach of old fashioned trading in a high tech world teaches her students how to trade by reading the tape and spotting where the dark pool prints are, which teaches here students how to spot a correction before it happens.
She is the author of “Counting the Cards of Wall Street”, an online workshop which focuses on trading around volume and technical analysis. She has taken hundreds of pictures of real time trades in an effort to teach her students how to follow the smart money.
She also does live workshops where she teaches her students in real time.
Stefanie Kammermans’ Services
The Java Pit Trading Room
The Java Pit is a unique trading room experience. It is run by Stefanie Kammerman, also known as “The Stock Whisperer”.
She brings to the trading room 26 years of trading experience. She’s mentored and coached thousands of traders around the world. Not only does she teach beginner and advanced day trading and swing trading classes, but she also monitors her students very closely every day in her chat room. By sharing her screen with her students during pre -market and live trading, you learn by watching her trade, as if you were sitting right next to her. All throughout the day, she points out the highest probability trades following the Dark Pool. We trade stocks, options, futures, forex and crypto currencies.
Stefanie has two audio meetings throughout the trading day. The pre-market meeting is where she teaches her students how to find the highest probability day trading stocks. She teaches you by drawing lines on her charts and pointing out where the smart money is buying and where the smart money is selling, otherwise known as the big prints. She also points out the best trading levels for these stocks by zooming in and out of her charts. The afternoon meeting concentrates on the highest probability trades as well as what levels to enter and exit for the overnight swings.
The Java Pit consists of many experienced traders sharing their trades and trade set ups as well as many traders just starting out wanting to learn more. It’s an unbelievable trading community where the traders help one another with great advice about brokers, platforms, news stories, and stock picks. It’s a place where everybody works together as a team, and where knowledge is shared all throughout the day. It’s one big family where students can feel comfortably at home, have fun, tell some jokes here and there, but yet still obtain a serious attitude about trading.
The Dark Pool Weekly Whisper
Each week Stefanie records a “Whisper” video. These timely extended videos share the hottest trades for the week covering all sectors of the Market by following the Dark Pool! It’s Available Only on Dark Pool App Private Feed or in live trading room the Java Pit.
Dark Pool Secrets Book by Stefanie Kammerman
Stefanie wrote a book called Dark Pool Secrets that sheds light on the dark secrets of Wall Street. She explains how she has been able to develop dark pool trading strategies that help her to win 90% of her trades!
Check out her book on Amazon here. You can see how she developed her dark pool trading strategies. Stefanie discusses all the dark secrets of the stock market and exposes the manipulation that we all know exists.
Why is “Dark Pool Secrets” a MUST Read?
Profit: See big trades before they move stock prices, so you can profit off those moves.
Protect: See corrections and crashes coming before they happen, so you can protect yourself against losses.
With what you’ll learn in Stefanie Kammerman’s book, you can stop guessing when stock prices will move, and let the Dark Pools show you.
Every trade Stefanie Kammerman selected over the last 4 years has been documented. She has even recorded them on video. That’s why in addition to her book, she also created a companion DVD so you can look over her shoulder as she explains how to see into the Dark Pools and profit from them.
Best of all, anybody can do this. You don’t have to buy special software. With the secrets in Stefanie Kammerman’s book, you can get access, and see the Dark Pool trading activity for FREE.
She will teach you what the trades you’re seeing mean and how to use that knowledge to pick the hottest trades… just like she does.
Whether you’re an experienced trader or just starting out… whether you trade stocks, options, Forex, Futures or even cryptocurrency… seeing into the Dark Pools can transform the way you trade. And more importantly, it can transform your success rate and your rate of return.
An Introduction to Dark Pools
Dark pools are an ominous-sounding term for private exchanges or forums for securities trading. However, unlike stock exchanges, dark pools are not accessible by the investing public. Also known as “dark pools of liquidity,” these exchanges are so named for their complete lack of transparency. Dark pools came about primarily to facilitate block trading by institutional investors who did not wish to impact the markets with their large orders and obtain adverse prices for their trades.
Dark pools were cast in an unfavorable light in Michael Lewis’ bestseller Flash Boys: A Wall Street Revolt, but the reality is that they do serve a purpose. However, their lack of transparency makes them vulnerable to potential conflicts of interest by their owners and predatory trading practices by some high-frequency traders.
Rationale for Dark Pools
Dark pools are not a recent phenomenon; they emerged in the late 1980s.1 According to the CFA Institute, non-exchange trading has taken off in the United States. Estimates show that it accounted for approximately 40% of all U.S. stock trades in spring 2017 compared with an estimated 16% in 2010. The CFA also estimates that dark pools are responsible for 15% of U.S. volume as of 2014.2
Why did dark pools come into existence? Consider the options available to a large institutional investor who wanted to sell one million shares of XYZ stock before the advent of non-exchange trading. This investor could either (a) work the order through a floor trader over the course of a day or two and hope for a decent VWAP (volume weighted average price); (b) split the order up into, for example, five pieces and sell 200,000 shares per day, or (c) sell small amounts until a large buyer could be found who was willing to take up the full amount of the remaining shares. The market impact of a one million sale of XYZ shares could still be sizable regardless of whether the investor chose (a), (b) or (c) since it was not possible to keep the identity or intention of the investor secret in a stock exchange transaction. With options (b) and (c), the risk of a decline in the period while the investor was waiting to sell the remaining shares was also significant. Dark pools were one solution to these issues.
Why Use a Dark Pool?
Contrast this with the present-day situation, where an institutional investor uses a dark pool to sell a one million share block. The lack of transparency actually works in the institutional investor’s favor since it may result in a better-realized price than if the sale was executed on an exchange. Note that, as dark pool participants do not disclose their trading intention to the exchange before execution, there is no order book visible to the public. Trade execution details are only released to the consolidated tape after a delay.
The institutional seller has a better chance of finding a buyer for the full share block in a dark pool since it is a forum dedicated to large investors. The possibility of price improvement also exists if the mid-point of the quoted bid and ask price is used for the transaction. Of course, this assumes that there is no information leakage of the investor’s proposed sale and that the dark pool is not vulnerable to high-frequency trading (HFT) predators who could engage in front-running once they sense the investor’s trading intentions.
Types of Dark Pools
As of February 2020, there were more than 50 dark pools registered with the SEC, of which there are three types:3
These dark pools are set up by large broker-dealers for their clients and may also include their own proprietary traders. These dark pools derive their own prices from order flow, so there is an element of price discovery. Examples of such dark pools include Credit Suisse’s CrossFinder, Goldman Sachs’ Sigma X, Citi’s Citi Match and Citi Cross, and Morgan Stanley’s MS Pool.
Agency Broker or Exchange-Owned
These are dark pools that act as agents, not as principals. As prices are derived from exchanges – such as the midpoint of the National Best Bid and Offer (NBBO), there is no price discovery. Examples of agency broker dark pools include Instinet, Liquidnet and ITG Posit, while exchange-owned dark pools include those offered by BATS Trading and NYSE Euronext.
Electronic Market Makers
These are dark pools offered by independent operators like Getco and Knight, who operate as principals for their own account. Like the broker-dealer-owned dark pools, their transaction prices are not calculated from the NBBO, so there is price discovery.4
Pros and Cons
The advantages of dark pools are as follows:
Reduced Market Impact
The biggest advantage of dark pools is that market impact is significantly reduced for large orders.
Lower Transaction Costs
Transaction costs may be lower since dark pool trades do not have to pay exchange fees, while transactions based on the bid-ask midpoint do not incur the full spread.
Dark pools have the following drawbacks:
Exchange Prices May Not Reflect the Real Market
If the amount of trading in dark pools owned by broker-dealers and electronic market makers continues to grow, stock prices on exchanges may not reflect the actual market. For example, if a well-regarded mutual fund owns 20% of company RST’s stock and sells it off in a dark pool, the sale of the stake may fetch the fund a good price. However, unwary investors who have just bought RST shares will have paid too much since the stock could collapse once the fund’s sale becomes public knowledge.
Pool Participants May Not Get the Best Price
The lack of transparency in dark pools can also work against a pool participant since there is no guarantee that the institution’s trade was executed at the best price. Lewis points out in Flash Boys that a surprisingly large proportion of broker-dealer dark pool trades are executed within the pools – a process known as internalization – even in cases where the broker-dealer has a small share of the U.S. market. As Lewis notes, the dark pool’s opaqueness can also give rise to conflicts of interest if a broker-dealer’s proprietary traders trade against pool clients or if the broker-dealer sells special access to the dark pool to HFT firms.
Vulnerability to Predatory Trading by HFTs
Controversy over dark pools has been spurred by Lewis’ claims that dark pool client orders are ideal fodder for predatory trading practices by some HFT firms, which employ tactics such as “pinging” dark pools to unearth large hidden orders and then engaging in front-running or latency arbitrage.
Small Average Trade Size Reduces the Need for Dark Pools
The average trade size in dark pools has declined to only about 200 shares. Exchanges like the New York Stock Exchange (NYSE), who are seeking to stem their loss of trading market share to dark pools and alternative trading systems, claim that this small trade size makes the case for dark pools less compelling.
The recent HFT controversy has drawn significant regulatory attention to dark pools. Regulators have generally viewed dark pools with suspicion because of their lack of transparency, and the controversy may lead to renewed efforts to curb their appeal. One measure that may help exchanges reclaim market share from dark pools and other off-exchange venues could be a pilot proposal from the Securities and Exchange Commission (SEC) to introduce a “trade-at” rule. The rule would require brokerages to send client trades to exchanges rather than dark pools unless they can execute the trades at a meaningfully better price than that available in the public market. If implemented, this rule could present a serious challenge to the long-term viability of dark pools.
The Bottom Line
Dark pools provide pricing and cost advantages to buy-side institutions such as mutual funds and pension funds, which hold that these benefits ultimately accrue to the retail investors who own these funds. However, dark pools’ lack of transparency makes them susceptible to conflicts of interest by their owners and predatory trading practices by HFT firms. HFT controversy has drawn increasing regulatory attention to dark pools, and implementation of the proposed “trade-at” rule could pose a threat to their long-term viability.