strange accumulation, page-16

TCG: it is most likely some kind of program trade. These happens all the time in big caps and less frequently in liquid midcaps / small caps.

ARU currently trading 500K to 2m shares most days. Lets say I want to buy 500K shares .... how do I do it ... well I could just split the order into 5 orders of 100K and either hit the asks or sit on the bid ... the problem of this is that the first option involves paying over the odds (since the trade will cost me at least 1-2c more than the current price) ... the 2nd option will just drive up the price, as others will see the buy depth and pay the ask, so I may not get hit.

Enter the program trade ... the order is split into a lot of little parts, perhaps over several days, which are automatically executed, typically when volume is heaviest (ie around open and close). The exact way (ie whether the order sits on the bid or hits an ask) depends on a number of factors (eg volume traded that day already, remaining volume I want to execute, pattern of bids and asks etc) but it is controlled by a computer.

The ideal result is whether the stock trades up, down, or sideways during the day I am buying below VWAP or selling above VWAP.

Sometimes the proprietory trading desks of an investment bank make money by "guaranteeing" VWAP on an order (you will see a crossing after market at VWAP). They will try and make money by using their algorithm to execute the order, and pocket the difference between their buy price and VWAP as a commission. Of course this involves risk (eg an announcement) but that is how the game is played.

The upshot of this is that I basically just look at the volume of trades rather than the trades themselves. I dont think the existiance of program trades in a particular stock at a particular time means very much.