Tiny volume trades... is this the market makers?

[diliff]

I've been watching the time and sales on various stocks and have noticed that along with large volume trades worth many hundreds of thousands, there is quite often a lot of little trades, worth only tens of dollars or low hundreds, and I ask myself "who would possibly bother entering a trade of that size? surely the commission would be a huge percentage of the cost of the trade, making it extremely difficult to profit from"..

But then it occured to me that it might be the market makers at work, or someone with a vested interest in using tiny trades to coax the price in a particular direction, essentially increasing or decreasing the current price of the stock to encourage momentum. I assume those watching the volume as well as the price wouldn't be fooled, but is this what goes on? If not, what exactly is going on?

 

[cuttlefish]

Re: Tiny volume trades.. is this the market makers?

Its algorithmic/programmed trading and they're not paying commission on every trade.

http://www.asx.com.au/professionals/institutional/direct_market_access.htm

 

[xyzedarteerf]

I assume those watching the volume as well as the price wouldn't be fooled, but is this what goes on? If not, what exactly is going on?

qoute from George Carlin,
" coveting thy neighbor's goods is what keeps the economy going "

 

[alwaysLearning]

Re: Tiny volume trades.. is this the market makers?

Its algorithmic/programmed trading and they're not paying commission on every trade.

http://www.asx.com.au/professionals/institutional/direct_market_access.htm

Thanks cuttlefish, I was looking for some information on algorithmic trading as per this thread:

https://www.aussiestockforums.com/forums/showthread.php?t=11245

 

[tech/a]

Could also be part fills being completed.

 

[awg]

i always assumed most of them were as Tech said,

dont think anyone would put thru an order for 1 share!

see it all the time, they fill market orders from the listed sellers.

so if u sell 6000, u might fill 5998 at $1.00 and 2 at $0.99,
as that was what was for sale at the time.

regards tony

 

[noident]

dont think anyone would put thru an order for 1 share!

I see 1-share orders sometimes. They appear as actual orders in the depth queue.
Once I saw someone trying to prevent a stock from falling - when the last price was equal to bid they would buy 1 share at the ask price - and the last sold price would go up to the ask level. That person had done it quite a few times in the span of 1 hour or so. I wondered about the brokerage fees as I was watching it.

 

[cuttlefish]

I see single share orders in the queue sometimes as well and don't understand their purpose (they are not a result of partial fills, they are placed in the queue - maybe as some kind of place holder?).

Single share orders can occur as part of an on-screen crossing where the broker creates a crossing market by placing an order of 1 share on the bid or offer and then crosses the stock if there are no other takers for it. Then there are the partial fills that create odd lots here and there as well.

 

[noident]

maybe as some kind of place holder?).

This makes sense - I often see these placed by someone (presumably one and the same person) at a range of prices, e.g. (5.70, 5.80, 5.90). The reason is probably that if the price comes up close to, say, 5.90, then a fresh order for 5.90 will go behind a dozen of other orders at the same price. Then if the stock price reaches 5.90 only the first couple or orders may be filled at that price but not all. So someone creates a placeholder beforehand so that they can modify their order later if they want to, increasing the volume, retaining their position in the queue.
Still, they have to have cheap (free?) brokerage as many of their 1-share orders will get filled.

 

[Trembling Hand]

But then it occured to me that it might be the market makers at work,

We don't have market makers in ASX stocks unlike NYSE stock market makers.(do we??)

 

[RocketGirl]

Aah - I've often wondered this myself! As for the algorithmic trading - I kinda think it's good that shares are offloaded in packets like that... I've seen a MASSIVE sell go through which took up existing buy orders and dropped the price instantly. Pretty dumb if you ask me, coz they sold some of them off so cheap. *shrug*

This makes sense - I often see these placed by someone (presumably one and the same person) at a range of prices, e.g. (5.70, 5.80, 5.90). The reason is probably that if the price comes up close to, say, 5.90, then a fresh order for 5.90 will go behind a dozen of other orders at the same price. Then if the stock price reaches 5.90 only the first couple or orders may be filled at that price but not all. So someone creates a placeholder beforehand so that they can modify their order later if they want to, increasing the volume, retaining their position in the queue.
Still, they have to have cheap (free?) brokerage as many of their 1-share orders will get filled.

I don't think the place holding theory works. From what I've seen when amending orders, it splits the order. So if you have an existing order of 10000 shares and you amend it to 20000, the extra 10000 shares go to the bottom of the queue, but with the same order no. Unless that's just a commsec thing? But it makes sense to me to do it that way.. wouldn't be fair for a small order ahead of you to suddenly become huge.

 

[osmosis]

We don't have market makers in ASX stocks unlike NYSE stock market makers.(do we??)

iShares, for one, have market makers.

 

[kenny]

iShares use Citigroup and Susquehanna for market makers as appointed by ASX apparently.

http://au.ishares.com/get_started/liquidity.do

Haven't used iShares myself.

regards,

Kenny