Short data on WBT, page-1931

Well I guess the important thing to remember is that algos are used for many different reasons, and no one actually knows the motivation behind a trade (although there's usually always a perfectly good justification for even the most peculiar looking trades).

A very common use of algos is to distribute large orders. We have super funds, hedge funds etc. which need to trade millions of dollars worth of stock. If you look at the order book, you will see pretty clearly that they cannot simply press a button and buy that many shares all at once (as doing so would cause the price to move significantly, causing significant market impact cost). As a result, institutional buyers must break up these orders into hundreds and even thousands of smaller orders, and distribute them throughout the day. Now they could have a highly paid and highly skilled traders do this very repetitive and monotonous job, but that would obviously be a massive waste of capital and skills. So instead, just like many other industries have automated, investment t funds have also automated their processes through the use of algos.

These algos are often programmed to trade a small % the volumes traded during the day, e.g every 20 minutes. That means every 20 mins the bot will buy or sell an amount of shares equal to a certain percentage of the volume. If volume is low, so to then will the orders. The bots can't think for themselves, they have just been programmed to buy a certain percentage of shares every twenty minutes so if that % equals 1 share or 1000 shares, it will buy them.

What you'll often find as well is that there are many bots trading the same stock. Obviously there is never just one institutional investor buying or selling, so there will be many of these programs operating at once. As a result, you may have one bot selling whilst the other one is buying (with both bots belonging to two very different funds) which can create the perception of manipulation.

Hope that helps a bit, there are many instructional videos on algorithmic trading which are worth watching. Bots are critical, not just for providing sufficient liquidity (which reduces manipulation) but without them we wouldn't be able to have things like superannuation (as only algos make it possible to trade such enormous amounts of shares). They have actually made investing in equities more accessible for the average person via super etc.