Placement and Retraction of False Bids/Asks Prior to Open

[Smack]

It is common knowledge that much higher false bids and lower asks are often placed prior to open of trading for particular stocks - to create the illusion of pent up demand.

These bids/asks are often low volume and appear to tease those who are viewing market depth prior to open.

These false bids/asks always disappear just before the stock opens with the stock opening at more realistic levels in relation to previous close price and current market demand.

I have always been curious how these bids/asks are removed a split second before the stock opens and are not transacted.

I am keen to hear your thoughts on how this happens...

Smack

 

[Starcraftmazter]

Whichever !@#$bags are doing it have it programmed to send a cancel order that split second before ASX gets to their stock during it's open.

Pretty obvious ain't it?

I mean, ASX does all stocks in a defined order, so it should not be difficult to do this as they have their servers colocated in the ASX building with damn well near zero latency to the ASX.

 

[rnr]

It is common knowledge that much higher false bids and lower asks are often placed prior to open of trading for particular stocks - to create the illusion of pent up demand.

These bids/asks are often low volume and appear to tease those who are viewing market depth prior to open.

These false bids/asks always disappear just before the stock opens with the stock opening at more realistic levels in relation to previous close price and current market demand.

I have always been curious how these bids/asks are removed a split second before the stock opens and are not transacted.

I am keen to hear your thoughts on how this happens...

Smack

http://www.asx.com.au/products/calculate-open-close-prices.htm

 

[Smack]

thanks for replies.

the ****bags doing this must be very confident in their program to be able cancel these bids/asks a split second before open and have very clear access to the asx.

what program(s)/systems are used by the people to perform this with confidence?

smack

 

[skyQuake]

thanks for replies.

the ****bags doing this must be very confident in their program to be able cancel these bids/asks a split second before open and have very clear access to the asx.

what program(s)/systems are used by the people to perform this with confidence?

smack

1. They're usually not cancelling, they're trying to ensure they get filled at the open.
See: https://www.aussiestockforums.com/forums/showthread.php?t=11619&highlight=pre-open

2. ASX has a +-15sec randomness factor added in to opening/closing times so its fairly difficult to do things last second. Algos will jostle for position, but that starts at 15sec before the expected time.

 

[Boggo]

thanks for replies.

the ****bags doing this must be very confident in their program to be able cancel these bids/asks a split second before open and have very clear access to the asx.

what program(s)/systems are used by the people to perform this with confidence?

smack

You haven't read the link in the previous post have you, there are no ****bags, just people who don't understand how the opening (or closing) match out actually works.

 

[tech/a]

You haven't read the link in the previous post have you, there are no ****bags, just people who don't understand how the opening (or closing) match out actually works.

Its a conspiracy I tell you!

 

[Bowlane]

Its a conspiracy I tell you!

This might be interesting
http://www.lrb.co.uk/v33/n10/donald-mackenzie/how-to-make-money-in-microseconds

 

[cutz]

Smack and Starcraftmazter,

Does it make sense now ? To get a proper fill on the open/close you need to place you limit price above/below the match price as required.

 

[Boggo]

You haven't read the link in the previous post have you, there are no ****bags, just people who don't understand how the opening (or closing) match out actually works.

This is a snapshot of the closing matchout auction on RSG.
It is more likely that there will be buyers and sellers in the background with orders ready to go into the market and are holding off until they see what the matchout will be before they place them at the last second.

 

[suhm]

Sometimes there are false bids not just people wanting to get a fill. I.e. pre-open before a trading halt with good news the insto wants to sell into. They can put a large false bid on the buy line so that people desperate to get in will bid above that number and sets a minimum price, they may not even need to pull the bid until after the auction closes if enough people move their bids up and then proceed to sell into whoever is left without stock.

 

[Smack]

You haven't read the link in the previous post have you, there are no ****bags, just people who don't understand how the opening (or closing) match out actually works.

Yes, I have read those links with great interest.

However, the links do not explain why people insert bids $2.00 or $3.00 higher than the real market value of that stock - prior to open.....

These bids are generally very small quantities. For example I was watching the depth (via IRESS real time data streaming) for WPL for the last 2 days at 0930 to whatever time it open (around 10.15am ish). It was clearly evident bids were placed at $33.00 and $34.00 prior to open on both days and asks were at around $28.00. All these ridiculous bids / asks disappeared just before the stock opened and proceeded to behave in an orderly manner and not open at a $2 - $3 premium.

If you still think these are not false bids and asks, can you explain to me these large discrepencies in opening bid prices for WPL (which BTW did not experience any news of trading halts, etc....) ??

IMO - these out of place bids / asks are placed in depth by those who already own the stock and want to artificially increase demand with no substance to build up their own paper wealth.

Have a look for yourselves tomorrow morning at WPL for 30 mins prior to open...

Smack

 

[skyQuake]

Yes, I have read those links with great interest.

However, the links do not explain why people insert bids $2.00 or $3.00 higher than the real market value of that stock - prior to open.....

$2 on WPL is 6%.. Just to make sure its in front of everyone else. Guarantee the fill.

These bids are generally very small quantities. For example I was watching the depth (via IRESS real time data streaming) for WPL for the last 2 days at 0930 to whatever time it open (around 10.15am ish). It was clearly evident bids were placed at $33.00 and $34.00 prior to open on both days and asks were at around $28.00. All these ridiculous bids / asks disappeared just before the stock opened and proceeded to behave in an orderly manner and not open at a $2 - $3 premium.

They got traded through. Not cancelled. At the opening price. ASX is price then time priority. Since at the open price is uniform, there is nearly no disadvantage to putting in a higher bid.
Because they are small volume they will not move the expected match price by much. If it was 50k WPL at $35 then it'll have an impact. More so, if it gets cancelled regularly ASIC will investigate.

If you still think these are not false bids and asks, can you explain to me these large discrepencies in opening bid prices for WPL (which BTW did not experience any news of trading halts, etc....) ??

Again I do not think you understand the opening/closing match process. It does matter what price I put in above/below.. its the volume.

 

[Smack]

Thanks Skyquake.

If these bids did get traded, why do they not appear on any 'course of sales' history and daily charts?

All trades made should be made transparent for all to see.

As these trades do not appear on any course of sale history or chart, no trade has occurred IMO.

ASIC cannot justify the time spent investigating this activity and hence will not perform any such investigation that happens all too often on many stocks.

As I mentioned before, if you can - watch the pre-trading market depth (must be streaming real time IRESS data) from 30 mins prior to opening of any high cap highly traded stock. You will see for yourself, and not rely only on my observations....

Smack

 

[stu192]

Smack,

Still seems you don't understand the process. As added earlier, they do trade at the open and are in the course of sales (just not traded at the listed price).

Here's an example. Market depth is:

last nights close was 1.51

Buy side:
3.00 - 50 lots
2.50 - 50 lots
2.00 - 50 lots
1.50 - 1000 lots

Sell side
1.50 - 2000 lots
1.40 - 50 lots
1.30 - 50 lots
1.20 - 50 lots

When the market opens, the sell side and buy side are matched up and traded as follows:
- The buys are too high and the sells are too low, so using the volume, they are matched.
- the buys for 3.00, 2.50, 2.00, and sells for 1.20, 1.30 and 1.4 are all matched at 1.50 and traded.
- after open we have 1150 shares traded at 1.50 with 1000 still sitting on the sell side waiting to be filled

Thus the market open is 1.50. The higher buys and lower sells actually trade at 1.50!

If I wanted buy at the open.....I could put in a trade for 50 lots at 3.50 (before the market open).....and get filled at 1.50.

Most online brokers (not all) will show you the matched price before the open to give you an indication of what the open will be....and it will move. For example - if I go into commsec right now and look at market depth for BHP, we have buys for 39.25 and sells for 35.11.....but the matched price is 36.20. Thus those lower sells and higher buys will trade at 36.20 (of course others will add more trades before 10:00, and thus the matched price will move a little).
Same process happens between 4.00 and 4.10 everyday.

Hope that has made it a little clearer.

 

[Boggo]

My comments in red smack

Thanks Skyquake.

If these bids did get traded, why do they not appear on any 'course of sales' history and daily charts?
They do and they are !

All trades made should be made transparent for all to see.
They are !

As these trades do not appear on any course of sale history or chart, no trade has occurred IMO.
They do appear in the sale history, just not at the price they are in the market at, they all trade at the matchout price.

ASIC cannot justify the time spent investigating this activity and hence will not perform any such investigation that happens all too often on many stocks.
There is nothing to investigate !

As I mentioned before, if you can - watch the pre-trading market depth (must be streaming real time IRESS data) from 30 mins prior to opening of any high cap highly traded stock. You will see for yourself, and not rely only on my observations....
I have been seeing it for over 15 years, bids and asks all trade at the indicated matchout price !



Smack

Smack,

Still seems you don't understand the process.

We tried stu, he/she is obviously not interested in trying to understand it either

 

[Punta]

Got to say, hats off to Stu, Boggo, SkyQuake etc for taking the time to explain something that has been covered many times before and is clearly explained on the asx site.

 

[tech/a]

IMO - these out of place bids / asks are placed in depth by those who already own the stock and want to artificially increase demand with no substance to build up their own paper wealth.

If you feel more comfortable with that then go with it.

Who cares any way the world ends 2012-----23 /12.
The worlds always been flat.
The worlds run by the magnificent 7

 

[5oclock]

Got to say, hats off to Stu, Boggo, SkyQuake etc for taking the time to explain something that has been covered many times before and is clearly explained on the asx site.

Totally agree, the sort of patience must help them in their trading too!!!

 

[Boggo]

Ok, question for you smack.

When the market closes in a couple of minutes what price will the seller with 17760 for sale actually get for his shares that he has in the market at $0.50 ?
(I will show what actually happened later)