How to avoid being manipulated on low traded AIM shares14 Nov 2020 05:38
These notes mainly apply to low volume trading such as BPC’s and my observations using a 2nd level console.
There appears to be confusion when a sell is a buy. Usually any trade under mid-price is logged as a sell. Exceptions apply for delayed trades, but you have to look back at the time. Also look at patterns. If bid/ask is 3.5 – 3.7, with lots of red trades at 3.53 and 3.58, the ones at 3.58 are buys.
MMs
There are 8 MMs running the BPC shop. These are bots controlled by firms. By ‘bot’ I mean code, not a-holes. 2 of them SCAP and INV are also BPC’s in-house brokers. Tree shaking is done to (legally) ‘trick’ PIs. Examples: a temp lower bid to get PIs thinking SP is going down. Another is what I call the circus act. During a show, the ring leader raises his hat and points in the air when something amazing occurs, for example a height impaired clown being fired from a cannon through a fire hoop over a lions’ den. The MM equivalent is when they raise the bid/ask and fire off several tiny trades at the bid ask price resulting in the higher ask price as the last trade. PIs then think, ‘I better buy some shares ASAP before SP soars.’ During high volatility, it often does. Occasionally an MM doesn’t read an RNS. This occurred to INV after a recent II placing. The SP fell to 2.1p, but for 3 mins INV bought 4m at 2.4p. Note, MMs don’t care if the SP goes up or down, as long as they profit from the spread.
Auctions
In BPC’s case the professional traders with direct access and derivatives, often attempt to ‘manipulate’ the SP, especially at open and close. Sometimes they do predict what will happen during the day. Often large trades at the 0750 auction occur at above or below bid/ask when an RNS is issued. But for no apparent reason, if the bid/ask is 3.5/3.7, why pay 3.8 when in 10 mins it’s only 3.7 at the most? Sometimes MMs take account auctions, but often do not.
This article is very useful https://www.proactiveinvestors.co.uk/companies/news/81/idiots-guide-to-the-london-stock-exchanges-setsmm-0379.html
I suggest a LSE 2nd level console for £24/mth. See https://www.lse.co.uk/members/premium-services.html. PIs who trade FTSE 12 times a year don’t need one. Anyone that dabbles in AIM trading MUST. In days you will be able to predict when the bid/ask will change. Note, Google provides real-time UK share prices but not the trade’s size.
I wrote this to level the playing field and minimise fellow BB folks being manipulated. Or illegally so, via BB fake news such as... ‘sea of red this morning, SP will go down.’
If the 15/12 spud is a success, what may be a tiny difference now could be huge in January.
Consider copying this post on other LSE BBs you’re active on. Thanks. DYOR. GLA.
Starchild
https://www.lse.co.uk/profiles/starchild/
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