active "bot"???, page-6

Some professional traders instead of manually entering their orders into a computer, they rely on a set of trading rules (trading algorithms) which are entered into a computer. The computer then makes trading decisions for the professional trader based on these rules. Trading algorithms can be programmed to achieve different objectives – such as to minimise market impact costs and capture trading opportunities.

An algorithm is simply a set of instructions to complete a given task.

Algorithmic trading is a computerised, rule-based system responsible for executing orders to buy or sell a security.

Algorithmic trading activity on ASX has meant a;

•trade execution speed increase,
•daily transaction volume increase, and an

•AVERAGE VALUE REDUCTION FOR EACH TRADE.

Many retail investors find algorithmic trading unusual because it can generate a lot of trades for very small numbers of shares. ASX closely monitors algorithmic trading patterns – as it does for all trading activity - and while the level of algorithmic trading has increased in recent years, it has not raised major issues for ASX. When ASX does uncover evidence of manipulative trading behaviour, however generated, a referral is made to ASIC, the regulator.

To better understand the effects of algorithmic trading, it is useful to understand what algorithms are seeking to achieve.

Execution algorithms were developed to minimise the market impact of large orders and therefore reduce the costs of trading. The most common of these is VWAP – an algorithm designed to ensure that the execution of a large order is done at the VOLUME WEIGHTED AVERAGE OF A SECURITY OVER A DAY.

An execution algorithm is used to execute a pre-existing order in the most efficient manner as possible.

Example of an execution algorithm undertaking a Volume Weighted Average Price strategy

The VWAP strategy is one of the most commonly used trading algorithms. The aim of the strategy is to achieve a steady price over the day, weighted by the volume (number of shares) traded. A VWAP order would typically be achieved by splitting the total order into multiples of smaller orders, with these smaller orders being executed during the day. The table below shows a typical course of sales from a VWAP strategy. There are two large orders then a series of small orders being executed as part of the VWAP algorithm.

Security Price Trade size Time
XYZ 2.95 12,394 11:35
XYZ 2.96 7,356 11:35
XYZ 2.96 5 11:36
XYZ 2.96 5 11:36
XYZ 2.95 5 11:37
XYZ 2.97 5 11:41
XYZ 2.97 5 11:43


That article is from the ASX and I hope that this helps readers understand what "BOTS" (trade word for algorythmic trading) mean and do.

My "logical" take on what has been happening with ICN's SP these last weeks is that there is a large order in place. From what a "bot" is supposed to achieve, from above, it is to continually trade and to obtain the lowest average price for those trades over the day.
The fact that the SP has risen from 17.5 to 21.0 since the "bot" entered our market, "suggests" to me that the owner of the "bot" is a BUYER and that he/she is gradually buying as many shares as possible, but, naturally, for the lowest priced average for the day.

BUT, it keeps BUYING and the SP keeps going UP.

I can only deduce that the only facts that we don't know from what we have seen in the last few weeks are how many shares the owner wants to buy and how much do they want to pay in total?
Using the above VWAP method, it begs the question that IF people, other than the owner of the "bot", also come into buy and forces up the price, thus the VWAP, then the VWAP should, naturally rise and so would the SP.
But, NOBODY else seems to be buying, eventhough we are on the eve of probably the most important ann in ICN's history, drilling commencing on 855.
People are clearly afraid of the "bot" and that it might be a seller, but, "evidence" and common sense, suggest the opposite.
The SP has gradually increased since the "bot" came in and it makes sound common sense that someone who knows what ICN is doing would be loading up with as many shares that they can buy. And while there is no buying opposition, will continue to get them for a song.
Just my thoughts.
Can't wait for Halifax-1 to start and maybe force up that VWAP!!!