# Smoke and Mirrors? Significance of small share parcels



## barney (3 October 2006)

Hi folks, Just wondering if anyone can enlighten me on the significance of literally dozens of very small share lots being bought/sold on a given stock during normal trading?  Parcels of 224 shares one of the most common (approx. $4 sp)  The trades appear to have no bearing on the stock movement (most are bought without "creating" a new price level)............any advice?? 
Cheers, Barney  :dunno:


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## dj_420 (3 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

some could be ammendments, ie out of 10 000 shares you sold 9 800 and have 200 remaining, then amend it to get rid of the 200 parcel that is left.

only other guess is to create market sentiment, to give the impression that the stock is either been sold or bought and to create a selling buying opportunity.


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## nioka (3 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				dj_420 said:
			
		

> some could be ammendments, ie out of 10 000 shares you sold 9 800 and have 200 remaining, then amend it to get rid of the 200 parcel that is left..



This has happened to me twice today. Once where the order was filled in two parts and one where I increased the price on the balance not filled to fill the order.


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## barney (3 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				dj_420 said:
			
		

> some could be ammendments, ie out of 10 000 shares you sold 9 800 and have 200 remaining, then amend it to get rid of the 200 parcel that is left.
> 
> only other guess is to create market sentiment, to give the impression that the stock is either been sold or bought and to create a selling buying opportunity.




Hi there DJ, I reckon you are right with the second idea..........must be the traders trying to make the stock appear to be getting hit constantly to bump up their sell price/entice buyers, when the stock is not moving enough ....................interesting to watch how they do it................subtle market manipulation...... Cheers, Barney


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## cuttlefish (4 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

barney not sure which stock it is but some of the following are possible reasons for the small parcels:

* you say its a $4 share price - 224 shares is small but you'd be surprised how many people have portfolio's consisting of small parcels of $1000 or so worth of stock - not everyone's a millionare.

* the stock price was possibly not always $4 - if it was once $8 then that parcel was worth more and possibly a more normal sized parcel - that still doesn't explain the non-round number though.

* For bluechips many people choose dividend reinvestment as an option. So they might start with 10000 shares in a stock then this might grow to 10224 or some equally odd number via dividend reinvestment. If they sell their whole parcel then a bidder for only 10,000 shares will leave an orphaned parcel of 224 - this then propogates (the next 10,000 buyer ends up with 224 plus 9776 of the next 20,000 seller, who subsequently has 10,224 remaining of their 20,000 sell order etc.).

* There are also other ways that people end up with more shares in odd numbers such as bonus issues, converted bonus options etc.

* there are also possibly people that buy odd sized parcels as part of their trading money management strategy.  (e.g. If someone's tech analysis tells them to buy at $4 and set a stoploss at $3.88 and their max loss on a trade in their money management plan is $200 then they can buy 909 shares and still fit their money management criteria). (odd example but a possible reason).

Often if you look at the past history of a stock you can sometimes find a reason for funny little parcels.  For example I traded a small cap stock that would often have odd little parcels of 400 shares go through (at 10c per share - i.e. a $40 sized parcel!). I thought it was a bit suspect, but working back looking for a reason for this I realised that the stock was originally issued at 50c per share. 4000 shares would have been a $2000 parcel (not an unusual amount to be subscribed for in a float). 

Because the share price fell so much after the issue (it was a tech wreck stock), the shares then went through a 1 for 10 consolidation (so 4000 became 400) but the share price continued to fall, even after the consolidation, to 10c - thus explaining the odd small sized parcels that would appear from time to time (not surprisingly, often towards the end of the tax year).

So its not always a conspiracy - more often than not there's probably some sensible explanation for why these odd sized parcels are going through.


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## barney (4 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				cuttlefish said:
			
		

> barney not sure which stock it is but some of the following are possible reasons for the small parcels:
> 
> * you say its a $4 share price - 224 shares is small but you'd be surprised how many people have portfolio's consisting of small parcels of $1000 or so worth of stock - not everyone's a millionare.
> 
> ...





Thanks for that  :fish:,  I'm probably being overly suspicious........but it adds to the mystery a bit   

Just for the record the stock was BOL  (Volume for the day approx 320,000)  ........Of about 350 trades for the day, approx 180 trades were under 300 shares...............with 63 of those trades being exactly 224 share parcels............interesting just the same.  Cheers, Barney.


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## trader (4 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> Hi folks, Just wondering if anyone can enlighten me on the significance of literally dozens of very small share lots being bought/sold on a given stock during normal trading?  Parcels of 224 shares one of the most common (approx. $4 sp)  The trades appear to have no bearing on the stock movement (most are bought without "creating" a new price level)............any advice??
> Cheers, Barney  :dunno:



I have been told by asic that it is actualy a computer program that is doing
the selling , eg someone selling 100,000 share over a certain time frame .
Also sometime you can tell by the time apart between sells , one sell ever
3 minutes for example .


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## cuttlefish (4 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

Had a quick look through BOL - it could be related to their employee share purchase plan - employees were entitled to apply for shares - it was designed to let them utilise some $1000 tax free threshold to purchase shares - stamp duty and other fees would be deducted before allocation of the shares and they had some kind of loan scheme - the shares were held in a trust and escrowed for a period of time.  

But they've also issued various lots of shares in placements both to institutions and to shareholders as far as I can tell.  

Some of the placements were oversubscribed and were arbitrarily wound  back to 60% of the amount applied for which can also result in odd amounts.

In at least one of their appendix 3b's the amount of shares issued was evenly divisible by 224.


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## cuttlefish (4 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				trader said:
			
		

> I have been told by asic that it is actualy a computer program that is doing
> the selling , eg someone selling 100,000 share over a certain time frame .
> Also sometime you can tell by the time apart between sells , one sell ever
> 3 minutes for example .





sounds like a sensible explanation as well - would explain the frequency of the small parcels being traded.


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## barney (4 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				cuttlefish said:
			
		

> Had a quick look through BOL - it could be related to their employee share purchase plan - employees were entitled to apply for shares - it was designed to let them utilise some $1000 tax free threshold to purchase shares - stamp duty and other fees would be deducted before allocation of the shares and they had some kind of loan scheme - the shares were held in a trust and escrowed for a period of time.
> 
> But they've also issued various lots of shares in placements both to institutions and to shareholders as far as I can tell.
> 
> ...





Thanks for that research C, (and Trader),  And here am I thinking I was on to a conspiracy theory   ............. It did have me a little confused as to why so many small parcels would be bought if the buyer/s were paying brokerage fees, but your explanation clears that up..........(Just for my own safety, I'll still hang on to a little bit of suspicion....I think that is healthy when dealing in the stock market    Cheers, Barney


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## spitrader1 (7 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> Thanks for that research C, (and Trader),  And here am I thinking I was on to a conspiracy theory   ............. It did have me a little confused as to why so many small parcels would be bought if the buyer/s were paying brokerage fees, but your explanation clears that up..........(Just for my own safety, I'll still hang on to a little bit of suspicion....I think that is healthy when dealing in the stock market    Cheers, Barney



guys unfortunately you are all wrong.....its a banks arb traders machine....they trade the sread between the SPI and the cash market and when they decide the spread is right and they want to trade they hit the market for literally 100's of different shares for small parcels at the same time getting set in the futures markets....one of the post was also slightly correct as well, sometimes it could be what is called a VWAP engine, a program  designed to achieve vwap on small insto orders.


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## barney (7 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				spitrader1 said:
			
		

> guys unfortunately you are all wrong.....its a banks arb traders machine....they trade the sread between the SPI and the cash market and when they decide the spread is right and they want to trade they hit the market for literally 100's of different shares for small parcels at the same time getting set in the futures markets....one of the post was also slightly correct as well, sometimes it could be what is called a VWAP engine, a program  designed to achieve vwap on small insto orders.





Thanks for that ST1, So would that mean that they consider the share undervalued if they are buying, and overvalued if they are selling?...... Also bearing in mind that 100's of these parcels have gone through over the past few days,      a very large cross trade order (XT) of over 400,000 shares went through in one trade late friday arv................does this indicate anything in particular, or could it simply be an insto closing their position for the weekend??  Thanks Barney.


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## spitrader1 (7 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> Thanks for that ST1, So would that mean that they consider the share undervalued if they are buying, and overvalued if they are selling?...... Also bearing in mind that 100's of these parcels have gone through over the past few days,      a very large cross trade order (XT) of over 400,000 shares went through in one trade late friday arv................does this indicate anything in particular, or could it simply be an insto closing their position for the weekend??  Thanks Barney.



barney, it has nothing to do with under or overvalued, it just means the spread between the cash market and the futures market has moved where they want to take a position, they can do it either way also, ie, be short the cash long the future, or long the cash short the future (as my wife just pointed out being long cash is easier because you dont have to have borrow in place if you wish to short the cash market)


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## spitrader1 (7 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> Thanks for that ST1, So would that mean that they consider the share undervalued if they are buying, and overvalued if they are selling?...... Also bearing in mind that 100's of these parcels have gone through over the past few days,      a very large cross trade order (XT) of over 400,000 shares went through in one trade late friday arv................does this indicate anything in particular, or could it simply be an insto closing their position for the weekend??  Thanks Barney.



the 400T crossing could be so many things its not really worth speculating...


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## barney (7 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				spitrader1 said:
			
		

> barney, it has nothing to do with under or overvalued, it just means the spread between the cash market and the futures market has moved where they want to take a position, they can do it either way also, ie, be short the cash long the future, or long the cash short the future (as my wife just pointed out being long cash is easier because you dont have to have borrow in place if you wish to short the cash market)




Cheers for the info ST1

Wouldnt mind having a bit of "long" cash myself


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## Seneca60BC (16 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

Hi Guys

These small parcels are shares being bought by a computer system for a buyer - eg I have noticed ever since the company I am holding announced a buy back, I have been seeing small parcels of shares being bought at market.

Hope this enlightens some.

Regards


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## NeoT1 (16 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

*X means that the order is split into two parcles and the second has the X, the other thing is that orders can be transacted off line as an 'Off Market' order this is generally where an individual wants to transfer shares to another entity ie; from X to Wife or Husband or Trust account or Company, most insto's do this as they transfer massive parcles that dont hit the volume until after market close or the next day, so therefore even intraday volume can be subjective - If there is an off market transfer they pay only 'Capital Gains' for the transaction, no brokerage in most cases, this can be done through most full service brokerage firms. 

If you look close enough at your computer screen you will see the individual pixels, if you look to closely at the market you can by sheer accident miss the overall direction of the market, and be gobbled up in intraday frenzie - unless you have 3 - 8 screens with all sorts of info on them this is not worth the time or effort. 

Reward v/s Time*


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## Basilisk (16 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> Hi folks, Just wondering if anyone can enlighten me on the significance of literally dozens of very small share lots being bought/sold on a given stock during normal trading?  Parcels of 224 shares one of the most common (approx. $4 sp)  The trades appear to have no bearing on the stock movement (most are bought without "creating" a new price level)............any advice??
> Cheers, Barney  :dunno:




Here's the answer I got back from the ASX a few weeks back when I saw the same thing happening with IRE.

_The large number of small trades is most likely an example of algorithm
order. A common example of an algorithm order is an order that try's to
achieve the volume weighted average price over the course of the day.
The algorithm will split one large order up into a number of small
parcels and then send each small parcel to the market at an appropriate
time in an attempt to get the average price. There are various types of
algorithm orders which in general result in a greater number of small
value trades. Another example of algorithm trading is index arbitrage.
This involves buying a portfolio of shares that replicates the index and
simultaneously selling a number of futures contract against this
portfolio. Often index arbitrage results in small quanties of shares
traded and especially in unusually parcels. This is because each stock
has a separate weighting in the index and an index arbitrageur will
execute fixed dollar "baskets" of trades.

Algorithm trading is something we are aware of and have seen an increase
in algorithm trading over the past year. We expect that with an
anonymous market and the proposed changes to trading fees that it will
continue to become more popular as has been the case in overseas
markets.
_


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## Seneca60BC (16 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

thanks bas - good explanation from the ASX!


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## Kauri (23 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

This logarithmic trading must be a hard way to earn a living...
    e.g   today in IGO, in fact for a few days now, lots of 19 and 20 shares being traded regularly.

  In the clip below...
                           @ 11.32  bid  5.04  ask  5.08   buy 19 @ 5.08
                           @ 11.56  bid  5.05  ask  5.07   sell  19 @ 5.05
                           @ 12.08  bid  5.05  ask  5.09   buy 19 @ 5.09
                           @ 12.21  bid  5.05  ask  5.09   buy 19 @ 5.09
                           @ 12.43  bid  5.08  ask  5.09   sell  19 @ 5.08


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## Out Too Soon (23 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				spitrader1 said:
			
		

> guys unfortunately you are all wrong......



LOL
No look guys your probably right & wrong. "It was me" Jim Carey , "Liar, Liar"
Barney you started by mentioning 224 shares @ ~$4, that's $896 which is exactly the type of trade I've been making over the last 15 months. I've been keeping Westpac rich.   ($30/ trade) Why? you ask, well 
(A) I've been learning the best way I know how. (the hard way) & 
(B) I don't have much money to trade with.
I've made a few thousand profit from a beginning of ~$8K & recently have become confident enough to make larger trades i.e  $3K-$5K. I don't think I've made any trade that's affected a sp.   I believe there r prob many ppl like myself making these seemingly small trades, yes, if I spend $600 I need a 10% rise just to break even, a hard but good way to learn.

PS: up yours Westpac I'm changing to Netwealth. :


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## barney (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

Thanks for all the answers above lads ................... Heres a copy of the last few trades on PMN today .............. Not a small parcel of shares, but what is the "SMALL" price of $1.24 (32,079 shares .. Late trade Crossed trade) all about? ............. did somebody press the wrong button ???  I hope not!!  Cheers Barney.

Time	Price	Volume	Cond	Attrib	Buy XRef	Sell XRef
16:15:47	6.915	125,322	LT XT			
16:12:15	1.24	32,079	LT XT		 
16:10:03	6.92	1		F		
16:10:03	6.92	1,630	XT	G		
16:10:03	6.92	75,000		F		
16:10:03	6.92	50,000		F		
16:10:03	6.92	20,531		F		
16:10:03	6.92	10,000		G


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## 2020hindsight (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> ..did somebody press the wrong button ???  I hope not!!  Cheers Barney.
> 
> Time	Price	Volume	Cond	Attrib	Buy XRef	Sell XRef
> 16:15:47	6.915	125,322	LT XT
> ...



Isn't it the case that with most of the E-trades of the world, that you cant press the wrong button without getting a warning? - at least it will ask you to confirm if Im more than like 5% lower than market price.  Maybe Im thinking of HSBC. 

PS  I reckon this is just some big boss selling some shares to his secretary trying to convince her to go on that dirty weekend.


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## nizar (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				Out Too Soon said:
			
		

> PS: up yours Westpac I'm changing to Netwealth. :




westpac is the WORST
im moving to etrade soon (POWER etrade)
let me share a story: the other day i wanted to place a stop on a trade, and i went to conditional orders immediately after i bought and clicked on stop losses, and because it was my 1st time using the feature, they asked me if i read terms and conditions, u know the drill, scroll to the bottom, and click on "Iv read and understood blah blah blah" click on next BUT THEN they took me to a 20-question multiple choice quiz!! it was about the terms and conditions to show i understood and i had a go but they wouldnt let me proceed to place the stop until i answered every question correctly.
Well whadya know the sp plummeted and i lost a few Gs   

that example is kinda my fault (?) but i seriously didnt expect that much hassles just to place a stop but i guess i couldve read it b4hand. yeh and westpac have heaps of other problems and its just not good enough for what i wanna do. its very slow as well.


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## nizar (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				barney said:
			
		

> ............. did somebody press the wrong button ???  I hope not!!  Cheers Barney.
> 
> Time	Price	Volume	Cond	Attrib	Buy XRef	Sell XRef
> 16:15:47	6.915	125,322	LT XT
> ...




like what happened in Japan!
but it didnt really adversely affect the sp in any way. the next trade was back to normal market price. damn that 1 share trade guy wouldve got drilled on brokerage % wise !! (i know, its probably a partly filled order or something)


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## MichaelD (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				nizar said:
			
		

> the other day i wanted to place a stop on a trade, and i went to conditional orders immediately after i bought and clicked on stop losses, and because it was my 1st time using the feature, they asked me if i read terms and conditions, u know the drill, scroll to the bottom, and click on "Iv read and understood blah blah blah" click on next BUT THEN they took me to a 20-question multiple choice quiz!! it was about the terms and conditions to show i understood and i had a go but they wouldnt let me proceed to place the stop until i answered every question correctly.
> Well whadya know the sp plummeted and i lost a few Gs



Hmmm. Can't say I have all that much sympathy for your gripe;

1. If your trading system is so time sensitive that 20 minutes makes that much difference then you should have been monitoring the position manually whilst filling in the quiz, or you're trading positions too large for the size of your account. btw CommSec have the same quiz - I suspect it is common to all online brokers to protect us from ourselves.

2. If you were planning a system which used conditional orders then surely you would have gone through the quiz before trading the system live. I had to to enable them in CommSec (before I put the first trade on that used them).

This is not meant to sound harsh, merely to point out the reality that all our actions or inactions in regards to the market are OUR problem, not the market's problem, not the broker's problem, not the weather's problem, not the barking dog's problem, not the computer virus' problem, not the moon's problem, not the tipster's problem, not the forum's problem...OUR problem.


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## tech/a (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

Due diligence first then place the order.


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## spitrader1 (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				Kauri said:
			
		

> This logarithmic trading must be a hard way to earn a living...
> e.g   today in IGO, in fact for a few days now, lots of 19 and 20 shares being traded regularly.
> 
> In the clip below...
> ...



its got nothing to do with making a living, its someone putting an order in a machine for a client...they cant bother to work it over the day themselves so they just hand it to the machine and hope it achieves near the vwap.


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## Kauri (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

Algorithmic Trading...

        Now I'm with it...   


A trading system that utilizes very advanced mathematical models for making transaction decisions in the financial markets. The strict rules built into the model attempt to determine the optimal time for an order to be placed that will cause the least amount of impact on a stock's price. Large blocks of shares are usually purchased by dividing the large share block into smaller lots and allowing the complex algorithms to decide when the smaller blocks are to be purchased. 


	

		
			
		

		
	
The use of algorithmic trading is most commonly used by large institutional investors due to the large amount of shares they purchase everyday. Complex algorithms allow these investors to obtain the best possible price without significantly affecting the stock's price and increasing purchasing costs.


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## spitrader1 (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				Kauri said:
			
		

> Algorithmic Trading...
> 
> Now I'm with it...
> 
> ...




RODGER THAT


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## barney (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*



			
				2020hindsight said:
			
		

> Isn't it the case that with most of the E-trades of the world, that you cant press the wrong button without getting a warning? - at least it will ask you to confirm if Im more than like 5% lower than market price.  Maybe Im thinking of HSBC.
> 
> PS  I reckon this is just some big boss selling some shares to his secretary trying to convince her to go on that dirty weekend.





Your mind is a den of iniquity 20/20, but then again you are probably right!!


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## emma (24 October 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

I don't think anyone has mentioned partial fills of an order - I've got 41 shares ofPBB (of a 1600 order) just before it lifted off - damn.


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## Nicks (1 November 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

On this subject, but which doesnt fit in with a lot of everyones answers is GAS. The answer to this will give us the true answer, or perhaps another similar scenario that plays out.

GAS is subject to a takeover by APT, which has now achieved over 90% and will compulsory aquire GAS at 2.99 a share.

Over the last couple of weeks there have been purchases of 3.00, which doesnt make sense as APT will get them for 2.99 anyway.

Today, an order for 50 shares went through for 3.00. Is there anyone experienced or in the know enough to explain this and have the correct answer? I am very curious as it does not makes sense or fit in with the scenarios you guys have offered (but thanks for them, its good info).


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## Kauri (2 November 2006)

*Re: Smoke and Mirrors!? Significance of small share parcels*

Maybe the Algorithmic computer trader hasn't learnt how to disguise himself during trading halts?     ..... (time is out, havn't adjusted for the eastern timezone.)


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