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Thread: Bot Trading

  1. #1

    Default Bot Trading

    Ok, what is this and who uses it?

    From what Ive gathered its based on a computer system that buys or sells shares at regular interval to accumulate....possibly used by instituions?

    Im watching a company today that has about 300+ trades in lots of about 100 shares ($34.50 )
    Ive noticed it buys every minute.

    Could this be a sign that someone is accumulating and a good time to buy into this stock because of either some news on its way, or a substanial change in holding?

    Thx

  2. #2

    Default Re: Bot Trading

    I think the Bot's reason for buying could only be known by the bot user..
    It could be a signal for both buying selling or holding.

  3. #3

    Default Re: Bot Trading

    Its bought approximatly over 50K in shares today.

    Guess it could be for any number of reasons.

    If a JV was going to be announced soon, would it be the JV partner buying up? Or are shares generally alloted to a JV partner?

    Just keen to hear about the many different reasons for bot trading.

  4. #4

    Default Re: Bot Trading

    Quote Originally Posted by Go Nuke View Post
    Its bought approximatly over 50K in shares today.

    Guess it could be for any number of reasons.

    If a JV was going to be announced soon, would it be the JV partner buying up? Or are shares generally alloted to a JV partner?

    Just keen to hear about the many different reasons for bot trading.
    Bot trading is on the rise.

    A lot of the insto's run algo execution systems instead of placing the order with a dealer.

    The algo system then "manages' the order into the market.

    The overwhelming "strategy" is a simple VWAP execution. Ie Complete my order and beat the VWAP for the day (or from order placement time). The execution system will do this by splitting up the order into multiple trades over the course of the day.

  5. #5

    Default Re: Bot Trading

    I have seen Deutsche Bank use it. From time to time they will do it to purchase (or Sell) small parcels of shares at specific intervals and prices. It may not necessarily be tied into any forthcoming news or announcements. It may just be related to their trading policies or the portfolio's.

    Usually they do it this way so it won't affect the price and they can purchase (or Sell) the maximum amount they want at the price they want.

  6. #6

    Default Re: Bot Trading

    I was wondering if anyone knew of any good books or places to learn about bot trading and analysing trades to see what their algorithm is trying to do? I'm seeing increasing activity in a few of the stocks i'm tracking and want to add to my knowledge base.

  7. #7

    Default Re: Bot Trading

    The trend seems to be continuing with the rise of algo trading, I think I have a bettter understanding of it these days, I think it makes it a bit hard to make a penny on the pre-open post good results as they seem to get bid up hugely unless it is a piddling micro cap with no bot following. Bot flashes an order for a bid equal to most of the stock that human traders have bid for just before the market returns to normal trade starts and feeds the stock back to you since you have missed out on acquiring it. That seriously frustrates me at times.

    Reason for the post was that I saw on the AIM that automatic trades are denoted as such and whether they were a buy or a sell (not sure how they do this as presumably the bots would be trading with each other at times) which would be a huge leveller and decrease a lot of the angst involved if implemented here given some of the strategies the bots use would be illegal if done by human traders.

  8. #8
    awg's Avatar
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    Default Re: Bot Trading

    I read it accounts for approx 25% of ASX trades, and growing, US up to 70%

    I believe a Volume rebate from the Exchange is available in USA that can make the strategy advantageous

    Does make it hard for day traders, as they can execute and control the bid/ask before one can type ones order, when active.

    Last S&P update had 4 of my stocks included in their Indexes.

    Throughout the entire day, each one of them was continually traded by "X-mas Tree" bots, and it was a complete waste of time trying to 2nd guess them

  9. #9

    Default Re: Bot Trading

    I've picked up some shares in AYN a couple of weeks back.

    Today I was tipped off and confirmed that a bot was buying 1400 shares at a time for a number of hours.

    Quote Originally Posted by PT Cruiser View Post
    Fair bit of BOT action going on here today - 1400 shares at a time.
    http://www.aussiestockforums.com/for...t=17995&page=3

    This bot trading is of interest to me, I work as a computer programmer and am currently scraping live data and am working towards detecting this sort of behaviour to maybe profit from it in some way.

    I'm not sure what the motives are for buying/selling stock in this way - maybe it's harmless. However, bots making trades smacks of someone wanting to hide something.

    Wouldn't it be much more expensive to buy/sell in small parcels for several hours rather than buying/selling the whole lot in one go.

    Please enlighten me.

  10. #10

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    Default Re: Bot Trading

    Quote Originally Posted by LifeChoices View Post
    ... Wouldn't it be much more expensive to buy/sell in small parcels for several hours ...
    Please enlighten me.
    I am not enlightened myself but I believe that Paritrade bills daily for all trades in a single equity. eg add all AYN transactions for one day ... one bill ... one brokerage ... done!

    Buying small lots has less effect on SP and yes bot trading is trying to hide something (accumulating or dumping on large scale)! Should be a thread somewhere
    Last edited by burglar; 22nd-April-2011 at 05:05 PM. Reason: incompetance

  11. #11

    Default Re: Bot Trading

    It has to be sneaky for sure. Why buy 1,400 shares every minute for several hours rather than buying 400,000 shares in one go.

    When I got tipped off, that's what I saw was happening. I thought to myself there is an advantage in doing that sort of thing for sure.

    They need to make the bots smarter.

    I'm with you Burglar - what we need is a bot watch thread.
    Last edited by LifeChoices; 22nd-April-2011 at 05:24 PM.

  12. #12

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    Default Re: Bot Trading

    Quote Originally Posted by LifeChoices View Post
    It has to be sneaky for sure. Why buy 1,400 shares every minute for several hours rather than buying 400,000 shares in one go.

    When I got tipped off, that's what I saw was happening. I thought to myself there is an advantage in doing that sort of thing for sure.

    They need to make the bots smarter.
    I'd spotted weird things happening, especially in the pre open and in the post close (which incidentally is also called pre open)!
    I had initially put it down to something in the drinking water!! @v@

  13. #13

    Default Re: Bot Trading

    Quote Originally Posted by burglar View Post
    I'd spotted weird things happening, especially in the pre open and in the post close (which incidentally is also called pre open)!
    I had initially put it down to something in the drinking water!! @v@
    When I get my comsec 2 bit scraping software up and running I'd like to contribute to a new fourm category called - bot watch.

    I want to better understand how and what the illuminate are buying and selling using their low level robots.

  14. #14
    Positive Expectancy nulla nulla's Avatar
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    Default Re: Bot Trading

    Some of it is just simulation that a share is being actively traded (dare I say it, by real buyers and sellers) when in fact every buy processed has a corresponding sell for the same volume of shares.

    Also I understand some of the "bots" place and remove bids in a buy and/or sell queue to constantly change the depth volumes, making it look like there is a lot of buying and selling going on when in fact no shares are changing hands.

    Then of course there is the jiggling of the closing price, where someone is processing an order(s) to set the closing price so that only one share in respective buy/sell queue at that target price goes through.

    Makes for an interesting spectacle when two bots are competing with each other to set the closing price and they are trying to get the last adjustment in before the auction closes at 4:10pm.
    "Speak softly, but carry a big stick". Theodore Roosevelt.

  15. #15

    Default Re: Bot Trading

    Quote Originally Posted by nulla nulla View Post
    Some of it is just simulation that a share is being actively traded (dare I say it, by real buyers and sellers) when in fact every buy processed has a corresponding sell for the same volume of shares.

    Also I understand some of the "bots" place and remove bids in a buy and/or sell queue to constantly change the depth volumes, making it look like there is a lot of buying and selling going on when in fact no shares are changing hands.

    Then of course there is the jiggling of the closing price, where someone is processing an order(s) to set the closing price so that only one share in respective buy/sell queue at that target price goes through.

    Makes for an interesting spectacle when two bots are competing with each other to set the closing price and they are trying to get the last adjustment in before the auction closes at 4:10pm.
    I don't buy any of this.

    The only reason I can think of to program bots to buy/sell stocks in parcels at intervals is to maximize profits - they do it in an attempt to hide their actual trading.

  16. #16
    Positive Expectancy nulla nulla's Avatar
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    Default Re: Bot Trading

    Quote Originally Posted by LifeChoices View Post
    I don't buy any of this.

    The only reason I can think of to program bots to buy/sell stocks in parcels at intervals is to maximize profits - they do it in an attempt to hide their actual trading.
    I am not trolling for an argument. The comments psoted are merely observations made over the last few years. While "bots" are used to process large buy/sell orders in the manner outlined by yourself, they are also used in the manner outlined by me.

    I understand the algorithmic traders also receive rebates from the ASX reletive to their volumes of turnover.

    The following is an extract of the last few minutes trading in TLS before close on Thursday 21 April 2011:

    03:58:34 PM 2.850 96 273.60 XT
    03:58:34 PM 2.840 96 272.64 XT

    03:58:34 PM 2.850 59 168.15 XT
    03:58:34 PM 2.840 60 170.40 XT
    03:58:34 PM 2.850 1,909 5,440.65 XT
    03:58:33 PM 2.850 4 11.40 XT
    03:58:33 PM 2.845 1,014 2,884.83
    03:58:33 PM 2.840 335 951.40
    03:58:23 PM 2.850 65 185.25
    03:58:23 PM 2.850 121 344.85
    03:58:23 PM 2.850 2 5.70
    03:58:23 PM 2.850 7 19.95
    03:58:23 PM 2.850 151 430.35 XT
    03:58:23 PM 2.840 152 431.68 XT

    03:58:19 PM 2.840 1,155 3,280.20
    03:58:18 PM 2.850 57 162.45 XT
    03:58:18 PM 2.840 58 164.72 XT
    03:58:18 PM 2.850 47 133.95 XT
    03:58:18 PM 2.840 47 133.48 XT

    03:58:17 PM 2.840 269 763.96 XT
    03:58:17 PM 2.850 269 766.65 XT
    03:58:09 PM 2.840 1 2.84
    03:58:09 PM 2.850 43 122.55
    03:58:08 PM 2.850 134 381.90
    03:58:05 PM 2.850 25 71.25 XT
    03:58:05 PM 2.840 25 71.00 XT

    03:58:05 PM 2.850 262 746.70 XT
    03:58:05 PM 2.840 263 746.92 XT
    03:58:03 PM 2.850 160 456.00
    03:58:03 PM 2.850 66 188.10 XT
    03:58:03 PM 2.840 66 187.44 XT


    I have highlighted a sample of the buy/sells that go through within milliseconds of each other for the same size parcel where the difference in price is only one cent or half a cent. This goes on all day, not just with telstra.
    "Speak softly, but carry a big stick". Theodore Roosevelt.

  17. #17

    Default Re: Bot Trading

    It's at a point where you just can't sit your bid/offer in the depth.

    It seems like with many small stocks, 90% of the depth is owned by the institution, and maybe 10% by naive hotcopper traders.

    Reminds me of the quote from DRS: "A poacher who shoots at rabbits may scare big game away". The poachers (hotcopper traders and their naive movements) are making the big game (instos) behave differently.

  18. #18

    Default Re: Bot Trading

    I can't buy less than a $500 lot yet "professionals" can transact any dollar amount. They drip feed the market with small parcels and yes it is disruptive. Manipulative too in being able to create wider price ranges with a (for example) $1 transaction.
    "The common man is not concerned about the passage of time, the man of talent is driven by it."

  19. #19

    Default Re: Bot Trading

    These are the trades on BKN a few minutes ago, interesting to watch.

    (click to expand)
    Attached Images
    Si Hoc Legere Scis Nimium Eruditionis Habes

  20. #20

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    Default Re: Bot Trading

    A lot of brokers offer algos that will break up your orders and target certain prices.

    For instance IB has IBALGO where you can specify the urgency that you want your order filled, the time to start it and the price that you're targeting such as VWAP.

    Pretty handy tools IMO, especially if you need to do a fair bit of size.



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