Price Spike

[DGC]

Hello

Can anyone please explain price spikes on shares? I've attached a word document to illustrate what I mean.

The stock in question here is Lloyds Banking PLC (LLOY) on the LSE. I’ve been watching this share for a while, and it isn’t the first time this has happened, and I’m sure it happens on all shares. Anyway, on the 12th January you’ll notice the price spike from around the 28p level to the 25p level (only seen if you select trade prices as opposed to mid prices). I’ve included the prices recorded for that period highlighting the ‘Bid’, ‘Offer’, ‘Trade’ and ‘Mid’ prices for that period. How does this come about? This is roughly a 9.5% down and up movement in less than a second, what is it and how/who/why does it come about. Is it purely price manipulation to gun for stops below the old support level, if so, how can it be done, because the old market maker days when they simply manufactured the prices are gone, it’s all done on an electronic order book (SETS/SEAQ, etc), so how can it be done???

Sorry for the long rambling question, hope it makes sense, it probably sounds easier verbally than it does in print.

Any help gratefully received.

Thanks

DGC

 

[DionysusToast]

It's more than likely an off-exchange 'block trade' that executed at that price.

Sometimes 2 parties agree to a deal, usually when it's a large amount of shares. One co. has shares, another co. wants to have them, they agree a price and the deal is done.

They have to report these trades after the event and that can then make the chart look screwy.

Ask Mr Charts - he knows more on this than me.

 

[wackypete2]

I see a "Late Trade Correction" @ 25 3/4
This is either a trade that was reported late or it was a correction of an earlier trade. Another example of this happening would be a bad tick data. It does occur once in a while. Some charting programs filter these trades out so they don't show up on the chart as it alters the current bar/candle from it's true range. Most brokers also filter them out so they don't activate pending orders. You should call your broker to find out for sure.

Peter

 

[DGC]

Thanks for all the replies.

I checked the data with another provider and it was exactly the same, which would suggest the data is correct.

DionysusToast, would an off-exchange 'block trade' be like a kind of mini auction. If so this wouldn't affect normal trading, would it?

Thanks
DGC