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As with any commodity, MM's regulate the price. A true market can never be allowed to flourish. Imagine a scenario where gold never stops rising. Not only would few sellers appear but the supply/demand ratio would result in some kind of South Seas bubble. There have to be sellers therefore the price is reduced artificially now and again. Cannot affect the trend upwards but can ensure orderly progress during the period the value of money is falling or forecast to do so.
Buys v sells.
They are only an indicator here. As MM schemes are Mifid compliant so are the buy sell executions but peeps thing because it shows as a sell here it’s a sell. It’s not it’s a trade and we never know for sure if the aggressor was a seller or buyer.. it’s even harder when the spread goes out.
This may help....
# The published trades here can be 15mins late.
# Especially if the spread is wide, there is no way of knowing what side of the mid point the trade was or that said if it’s close you can’t tell buy from sell!
# If a sp falls quickly sells will look like buys as by the time the algorithm runs it puts a sell above the mid point and shows it as a buy.
# If a sp rises quickly a buy will look like a sell as by the time the algorithm runs it will be below the mid point so the buy looks like a sell.
# Furthermore with a wide spread you may find some MM’s are so far apart from the mid point so how do you know if it’s a buy or sell.?
# If you use interactive investor you may get a prompt, we have improved your order by £162 so your buy may look like a sell when published as there was one MM with a better book.
# or the stock may be illiquid and there is only 1 MM with the min so they push the spread out, I have seen 40% spreads on AIM, to deter trades. See volume and liquidity are key to gauging value.
I hope that explains some of the myths. But what difference does it make.
For every buy there is at some point a sell, why do you think the London Stock Exchange don't say buy or sell. It’s just a trade to them. It’s just the aggressors price that is published. I.e the trade instigator. The simplest way to gauge the buy/sell demand is the SP trajectory, the volume, and the chart candles.
Over the last couple weeks these are sold over the last couple months they are being bought. Hence it’s worth using the charts and looking at the RSI.
Trek
ALGO trades are part of MM schemes...
Definition: market making incentive schemes that the Exchange is mandated to offer under Article 48(2)(b) of MiFID and Article 1 of Commission Delegated Regulation (EU) 2017/578
Page 58 covers it and also ALGO trades. Worth learning the offside rule before you play footy because you can be sure the MM knows all the rules!
https://docs.londonstockexchange.com/sites/default/files/documents/rules-lse.pdf
ATB
Trek
why is the sp going down much more buys then sales ?
Over the last few weeks CAML was subject to sudden dips after a bunch of small AT trades - either you hold tight or use the dips to top up
TDT
You can go to Stockwatch and check the trades, one house is TD sec known to use Algos there are a few more.
Legal but knowing they are active in a stock can be very handy, they don't know the true value of a stock, and they can be used to drive a stock down.
You and I traders can't pull the trigger that quick even with stops, those quick drops and rises on PM are NOT you and I trades.
I trade on the American exchange and to a lesser extent the Canadian where I notice it the most, i avoid trading on the LSE esoecially AIM if I can help it...don't like the setup...wheeler dealers in the background.
agreed,
Although I didn't mention algos a rapid string of 100 share trades (and less) on ASX is not your average punter .
I haven't seen any algo trades here today but they are not uncommon e.g. over at CAML, APF etc
Oh yes I do
I monitor the individual trades size and house and you see when they arrive, useful to know but ultimately they damage themselves as the underlying value outs in the end.
; )
Algos, 70 to 80% of Algo users lose money !
It can also be used to knock prices down slowly.
tsx opened at CAD$2.10 - then a series of 100 share trades drops the price by 0.5% to 2.09
I thought it was just AIM that was bent