Areo - if you watch the course of trades you can see when the bots are at work - look for transactions of parcels of shares that are extremely small and often conducted at regular intervals - institutional traders/brokers don't pay brokerage like you or I do so they can either:
1. Drip feed small sells into the buy line in order to trigger people's conditional sells. If the price gets pushed down they buy into the sell down in order to accumulate.
2. Buy into the sell line in small amounts until larger buyers step in and drive up the price/or trigger conditional buys. The trader then sells into the price rise to make a profit.
The bots work on algorithms (logic and mathematical based equations) that determine the size of the parcel and the frequency, dependant on what you are trying to achieve.
Some companies use them to dispose of shares in a slow fashion so that the market doesn't get spooked downwards as they unload.
Add to this, the bot may place props or caps within the depth in order to achieve the traders aims.
The problem is you can see when the bots are at work, but its not really easy to determine their purpose. For example, I think that a program that allows you to reduce your large holding automatically whilst preserving the SP would be OK, but if you are drip feeding shares into the sell line in order to trigger conditional sales, so that you can accumulate more at a lower price, that's not cool.
Its also a method that skews the market in favour of the guys who don't pay brokerage. (ie. not most of us) The market should be a level playing field for all those who are involved regardless of whether we place our trades through Etrade or work for an institution. Obviously, this position of mine is fairly idealistic and I know that it's not achievable.
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