Looking at the course of sales, Algorithmic trading (Bots) may have been involved to some degree in today's trades. Here are some notes that I have also made on another forum for another stock that I hold.
To those new to Bots:
Algorithmic trading platforms (Bots) are usually employed by trading houses Large funds/ institutional investors and wholesale investors to execute their large trades into smaller trades.
They have a special arrangement in place where they pay a flat fee and they can buy as much and have as many trades as they wish for the same price. As such, they are NOT subject to the same retail brokerage fees that retail investors are subject to.
So they accumulate funds in small parcels to either manipulate the share price or accumulate shares in small parcels so as to not affect the SP i.e. buy 10 shares every minute. But sometimes they hit a algorithm where if volume exceeds a level or SP moves rapidly it will buy/sell larger orders.
Also they are elaborately programed so if SP moves, say down quickly they can initiate sell orders quicker than you can click your mouse button.
Bots can make those constant automated trades programmed to be made every minute - they are usually the 'vanilla' bots that just accumulate shares for you according to a pre-specified formula or VWAP. These are the ones that you all seem to pick up the most, but also the least 'harmful'.
The more elaborate Bots can be programmed to make random purchases/ sales. i.e. it will generate a random number between 1000-10,000 and make a purchase to that up to a maximum share purchase of $100,000 or if selling, sell up to a maximum of 8 million shares.
Why is this information important?
To add another level of complexity, you can have a 'stealth accumulator bot' to make automated 'dummy bids' so you focus of the bot's un-smart dummy bids (i.e. the small bids every minute) acting as a decoy for you to complain about (or to articfically affect the SP) while their true bids are going throgh as big sell orders coupled with an immediate small buy order to hide their trade (i.e. sell 1.000.000 @ 0.086 and buy 100 @ 0.087) so although they sell a large order at a low price, they make a small trade at a higher price so the ticker says the higher price > lessen panic selling > their sales getting a higher consistent price.
The opposite can also happen i.e. large buy orders with small sell orders to keep the IMPRESSION of a declining/ low share price > panic selling/ hitting stops > accumulation at lower prices. Often not only one bot is woking at a time i.e. JB Were may have the accumulator bot on while DB might have the 'stealth selling bot' operating while a wholesale investor may have a vanilla accumulator bot operating etc.
How can you idenifty a potential Bot trade?
Watch those course of sales figures carefully and ESPECIALLY those TIME-STAMPS. The answer always lies in the time stamps. Bots are instantaneous beings..they can buy and sell and sell and buy (in that order) large amounts quicker than you can scratch your nose. 1 Second = 10 hours for these computers.
However, please note that orders shown in course of sales data are for all orders. i.e. if you have in the queue 3 sell orders at 0.089 for John Smith SELLs 10,000; John Doe SELLS 20,000 and Richard Roe SELLS 25,000 shares respectively, when a fund decides to buy 50,000 shares it will appears as:
10:10:24 10,000 10:10:24 20,000 10:10:24 20,000
NOT as:
10:10:24 50,000
So this adds a second-layer of complexity without having broker-related data that asic have. Obviously, lower volume stocks are easier to identify this sort of behaviour than larger volume ones.
So the key is to find something like 10:10:24 100,000 @ 0.088 10:10:24 5 @ 0.089 10:10:50 5 @ 0.089 10:11:24 100,000 @ 0.088 10:11:24 5 @ 0.089 10:11:50 5 @ 0.089 10:12:24 1,000,000 @ 0.088 10:12:24 5 @ 0.089 10:12:50 5 @ 0.089
Should we be alarmed by Bot trading?
At the end of the day I must point out that the purpose of bots is not to significantly alter share price, it is a micro-game - a play on pips not line-swiping.
What we had today as correctly pointed out by others could potentially have been profit-taking to invest in other stocks which are close to releasing market sensitive information this quarter and to have greater exposure to them (as they perceive their annoucements to come earlier or to have more upside potential); or shorting (i.e. big boys know the sentiment is hold/ buy/ hyped up due to announcements soon to come, so they gamble that traders/ short-terms holders will be disappointed or impatient with share retreats and panic sell shares into THEIR loving arms for a lower price - so THEY have greater exposure to those announcements without having their trading money tied up in the stock than the mums and dads who held them for weeks patiently beforehand).
But just remember: shorters have to cover their positions; and when announcements in other companies are made and they 'sell on the news' they will probably want to come back in and reclaim their SDL seats.
Hope this helps :)
Foxtrot
SDL Price at posting:
51.5¢ Sentiment: Buy Disclosure: Held
