Melinda and all . . .As I understand the "autotrader" computer system that handles trades when a Nasdaq or OTC stock has no LIVE market maker. . .it is set with particular parameters, such as a spread representing a set percentage. . .and a point where the computer walks down to after buys come in. . I call this the place where the stock is parked. . . often with a lousy spread.
When set to autotrade, as most thinly traded stocks are. . .the parameters selected typically include NOT accepting trades between the bid and ask. SO, if you try for that extra 1/8th above the current bid, it will often move the bid like trying to grab a beachball in deep water. Then as you "REPLACE" your order, you continue chasing yourself. After chasing yourself to the point of frustration, you replace at the bid showing and cause the computer to show your sell as the last trade, thus holding the B/A there until someone else tries their hand or it walks back home.
"Cancel" the order all together, and if you are the only one that was chasing, watch how fast the B/A returns to where you started chasing it. [if more than one chase, it runs faster] I once spent all afternoon trying to fool the thing into selling me shares at a slight discount. . . couldn't do it. I tried buying and selling at various levels, compounding them from different brokerage accounts, anything to see if it would let me buy UNDER the ask showing. . . and it would not do it.
That tells us much about the way these are set up. When volume hits the stock unexpectedly and a live MM doesn't jump in, then the autotrader "accomodates" the orders. . .ticking up as bids get higher. . .but when volume dries up, it slowly falls back to the park location, leaving those that bought with a potential loss until more buying bids up the price again.
This ensures profits for the brokerage MMs that run these systems. If you think for a second that there is a REAL market maker sitting around all day long waiting for someone to buy or sell these thinly traded stocks, you are mistaken.
The equalizer is that most people have no clue, so those with some understanding have a slight advantage in picking entry and exit points. On the other hand, there are broker types that know precisely how these systems are set. . .so when they see "foolish volume" come in, they know where the computer is set to walk back to, based on trading history.. . . they can then make trades accordingly and win in both directions.
If any market savvy types can come up with a detailed explanation of precisely how these systems are set up...and post, then we will not be at such a disadvantage when we trade.
Bottom line. . .cancel instead of replace to see if you are chasing nothing but your own orders.
Rande Is |
