Toes in water...

[Bosan]

Hi all,

This is my first post here, though I've been lurking for a while! The plan is to see if I can make a small second income from some lightweight trading.

I've gone for a two pronged attack. Spreadbetting on the Dow through CMC, very small stakes to keep my blood pressure in check. And physical share dealing through Imiweb. Not wishing to risk my meger capital with CFD's yet!

Now I expected the S/B to be hard work, and it is. I'm about evens after a few weeks. But today I took a kicking through Imiweb.

I'd gone hard into Antisoma at .22p on gut + news, and bottled selling at .31p yesterday (Greed) and stopped myself from selling at .29p (Fear) after the good results. However when they slipped to .28p I wanted out. Asked Imiweb to sell my 19500 shares, and they're system said they couldn't sell that many at once...

They still have max sell set at 35000 shares (aprx, but still!!), so the share price slid to .275p (AGHHH) I try to sell 9500 shares - same message... (AGHHHH) share price slips to .27p ...

I've left it there, as if needs be I can wait for another bounce. It's just gauling when you can't action your requests. Needless to say Imiweb have a cross e-mail in their inbox (though I'm hardly expecting a swift reply now!).

Does anyone have any suggestions / reccomendations for who I replace these guys with? (Also whether ASM do actually look any good whether my plan stinks etc....)

Many thanks in advance....

 

[waytogo]

Hi

I just had a quick look at the ASM chart and am not surprised that your having trouble selling that many shares. Yesterday the total volume traded was 38403, and that was quite a significant volume spike. It looks like the average is nearer 8000/day.

If you really want to get out I would sell a few thousand a day over the next few days. It depends what your comfortable time length is for holding on to shares.

Personally I would not trust a share whose chart is heading vertically upwards into a prior resistance area, but I know absolutely zilch about the company so its probably best not to listen to me!

Waytogo

 

[Skimbleshanks]

Hmmm ... I'm sorry to say that it looks as if you have learned a lesson about liquidity and the effect it has on you. Unfortunately these hard knocks are all part of learning about trading, so I hope you are able to look positively on your nasty experience and move on.

Liquidity is a killer - without it, as you have found, you are marooned high and dry and unable to exit when you want to, at the price you want. If you are going to trade rather illiquid stocks, then you need to trade as the insitutions do - scale in and out. Easier said than done of course, and I've never been of the 'scale out of a trade' school - if I want out, I want out.

When I started trading I could never fathom out why everyone said that penny stocks, such as the one you're trading, should be avoided at all costs. I learned my lesson, like you, and have never touched them since.

There is also the factor that your order to sell would possibly have been visible to others, who perhaps rather unkindly brought the price down rather sharpish as you saw - that's just the sort of games that the professionals can and do play.

I do hope your trade ends up OK for you.

 

[Bosan]

Thank you both for the replies.

It does seem that I've gone off and made large newbie error, which I don't mind too much, as this is how we all learn to improve.

The reason I went so hard at this co. is that they have a large R&D investment from Roche, combined with good clinical trial results. (Not particularly good TA I'll grant you!)

I'm concerned that I must be reading the volume completely wrong here though. When I look at either Hemscott or ADVFN there are many many larger trades being sold that are greater than 10K or even 20K volume wise. I'm sure I'm making some ghastly error here, so if you can set me straight I'd be most grateful.
Am I perhaps looking at CFD trades as well as 'real' purchases? Would that account for it?

 

[Skimbleshanks]

I don't know if you are aware, but in the UK trades can be reported up to three days after they actually happen, so that is why UK volume is not always easy to read - in fact it can be quite deceiving.

That also means that on the volume/trades list what might appear to be a 'sell' was in fact a 'buy' three days ago, and vice versa.

On UK stocks when you sell, you are selling to a market maker (MM) - but there's no reason why a MM would necessarily want to take your trade, and that may be why the volume you wanted to sell was rejected. MMs are there to make the market, and end the day with a reasonably level book. So if they felt unable to find a buyer, they would be left with the stock on their hands, and therefore it's easier to reject an order than unbalance the order book. That's my understanding anyway.

 

[ChartMan]

I'll just add this- MM's will all specify NMS normal market size- the NORMAL maximum quantity of shares they will buy/sell in one lot at their quoted price.They are obliged to do this. Larger than that, they are equally NOT obliged to trade at the quoted price. As you found out, they do not even have to make an offer!
As Skim says, lesson learnt. Steer clear. If you must, just have a flutter of a small quantity and if it turns out to be one of those rare 1000% rises , It'll pay for all your stamp duties. If It's a 1000% faller, no big deal.

 

[Bosan]

Yes, as you say lessons to be learnt!

I'd hoped for maybe a 30% rise in the short term, which it did do. But if nobody wants to buy your stock I guess it doesn't matter how much it goes up! (Big post it notes on Monitor (THIS IS WHY YOU DON'T BUY CHEAP STOCK)) :idea:

I clearly need to go back to my books and read the volume and liquidity chapters. Skim said that my frantic attempts to dump the stock may have alerted the MM and helped the price down even lower.

I really thought that watching ADVFN's output was showing me hour by hour volume, and I'm kind of shocked that those might be 3 day old trades. If I bought into level 2 info would that give me more accurate info?

I'd thought of avoiding that to try to keep things simple, but perhaps this isn't a game where you should keep things that simple?

Ah well.. Onwards.

 

[ChartMan]

Yes L2 identifies the TYPE of trade, ie MM to MM, 3 days delayed etc. There are a multitude of TYPES.......

 

[CityTrader]

Skimbleshanks- sorry, I know it must seem like I'm forever correcting you, BUT trade reporting under LSE rules must be made withing 3 minutes, UNLESS it's a Procted trade, a Worked Principle Agreement or a Block trade.
Market Makers are obliged to maintain a 2 way price in AT LEAST NMS- many display a larger than NMS size, and they are obiged to trade in that size to other (non market making firms) in that displayed size. A good dealer at a quality broker will usually have the ability and relationships to deal at a far superior price to a telephone jockey at some telephonic share dealing call centre- but then cut price brokers have to keep their costs down, and they are not prepared to pay for quality dealers. "
Remember- "If you pay peanuts you get monkeys"

Wayno

p.s. if anyone wants an explanation of WPA's. Block Trades, Protected trades or market makers obilgations, let me know- I may write the definitive guide to SEAQ trading. ( there again, maybe I should just hire myself out as a consulant/non-TA trading advisor!)

 

[Skimbleshanks]

Thanks for correcting me Wayno - I knew that all the interesting trades (the ones you really want to know about) are the ones which are delayed! Am I correct in saying that on AIM (Alternative Investment Market) the trades don't have to be reported for 3 days? Or have things moved on.

Bosan - there is no need to get Level 2 for UK stocks unless you are doing a lot of trading - your problem was that you were trying to shift a large quantity of an illiquid stock, and no amount of Level 2 would have helped you in that situation!

According to ShareScope, the NMS for ASM is 15,000 (not sure how accurate that figure is though), so it would appear that it was not Imiweb's fault that you could not sell 19,500 in one go.

 

[Bosan]

Again a few posts and I'm much the wiser. My thanks.

Skim- I think I've registered the liquidity lesson. I will bear this in mind next time I trade.

I think for the time being I will hang onto the ASM. While their chart may not be pretty I think their fundementals are heading in the right direction. I also think their drugs show huge potential, justifying the backing by Roche.

I'll turn my attention back to S/B as there are lessons for me here.

It has occured to me that had I had the courage to try CFD's instead of buying stock I would have been able to pull out at my discretion. However margin trading with, for me, significant capital still gives me the fear. Probably justified...

 

[CityTrader]

Skimbleshanks- not sure about AIM or OFFEX- never having been a market maker in either of those 2 markets.
As far as the NMS- not sure you guys want to get too hung up on that- if in a given stock, the NMS is ( say) 15,000- yet all the market makers are displaying a size of (say) 100,000 - then that second figure really should be your liquidity warning level- i.e. any broker- even a call centre one will be able to get a holder our of aposition of ( in that case) 100,000 rather than the NMS of 15,000. Hope that makes sense?
In actuall fact I've just looked at ASM - 9 market makers are quoting in a minimum of 25,000 - so for that guys broker not to be able to deal in 19,500 sounds very weird. But then of course I don't know the circumstances.


Wayno

 

[Skimbleshanks]

Thanks for the info Wayno.