Algorithmic trading and its impact on the share price.31 May 2025 10:28
Recently I've spent time trying to figure out how these low volume micro caps really work, ignoring hysterical ramping or deramping.
Like I've said before, I doubt if there are more than 1,000 PI holders of MATD shares. This would work out on average at 1,000 holders owning 1.2m shares each, with the remainder of the 1.4m float held by Petrovis. Some like MB and Manx may have say 12m to 13m shares each, however let's take an average of 1.2m shares each.
I don't believe that average PIs are responsible for most of the weekly/monthly volume figures that we see. Most are LTHs who sit tight on them - especially if they are bagholders with large paper losses. If you've held the shares for 5 or 6 years already then you are unlikely to suddenly pack up and sell. Chances are they are not under financial pressure to liquidate their shares if they have held that long. And I don't think that there are many private investors who do short term swing or momentum trading either.
So I believe that most of the daily/weekly/monthly volume is being done by algorithmic trading on the trading desks. Algorithms are programmes set up to follow a series of steps based on a set of parameters. Using AI these can also be set up to analyse an RNS release, and to then act on it. And algos tend to trigger off each other - this is a known cause of sudden crashes on the main markets. They are programmed to act on a raft technical indicators, such as support and resistance levels, 200 day moving averages etc etc. They are not programmed to analyse longer term prospects such as a JV or buyout in the pipeline etc, unless the subject suddenly comes up in an RNS release. I also believe that they are set up to regularly flip shares - buying on the bid and selling on the ask in very short timeframes, which the MM trading desks can do. So this is why most of the typical daily volume is purely algo driven and directed, and tends to be pretty low anyway.
So on Thursday we had the price touching a major resistance level of 2.4p, causing the algos kick in immediately, hence a pullback from that level late in Thursday's session. We then had the RNS talking about another delay with the payment from PC, the decline with H1 from 200 bopd to 160 etc. So the algos analysed quickly and then triggered a load of sell orders. Stops were then hit, triggering more sells. This is similar to what happened in mid November, as algo trading does tend to create these very sharp drops if certain parameters are met which they are programmed to quickly act on. And different algo programmes on different trading desks do tend to be programmed in a very similar way - hence them triggering off each other.
So this is why the ongoing price action is particularly important with low volume micro caps. With liquidity being normally low, the liquidity to buy or sell in bulk needs to be engineered to some extent. Hence the wild price spikes and swings in both directions as is very apparent in a 10 yea
Sign In
Follow the stocks
