Replies to post #161954 on DD Support Board and Research Team

[Monksdream]

As best as I can make of what the man has said I think he is talking about an order he placed that was only partially filled at a time when he figured the order would have been completely filled. Then the price changed that so that the remaining balance was out of the money. In this instance, I think he is saying he was screwed because his order should have been filled in its entirety. So he has asked a question concerning the nuts and bolts of execution.

I don't possess the expertise to explain what may have happened.

What I understand about the trading game is when the market for a stock is "fast" it means a lot of orders are taking place almost simultaneously. The thing about "fast" markets is they are always temporary. The price could rise substantially due to the sudden increase in orders. Then there is a point where the orders stop coming in. A seller who figures he can sell his entire position discovers that order doesn't get quickly filled. He checks his online account page for order execution and sees maybe half of what he wanted sold has been sold. He might wait a while and check again, figuring it was only a temporary lull in the action and that the action will pick up again. If it does it's likely the remaining balance of his position will be sold at his set price.

But what if the price simply stops going higher and begins going south. The remaining balance is likely to remain unfilled. If the price continues south to a point that position goes from profit to out of the money then it's matter of deciding what to do next. Wait for another rally or go ahead and limit the loss. In trading, taking a small loss is better than taking a big loss.

[tedpeele]

To clarify, the algorithm I'm talking about is a computer algorithm -- ie yes a program that follows certain rules.

I am saying that it is obvious that a program is being used to put up 'fake' asks because when I attempt to fill it it immediately is changed.

I have speculated that's a program used by the mm companies. Not a market maker as in a person - but the program that actually makes the market for penny stocks.

It has been suggested/claimed? that this would be illegal but I'm not sure why. It isn't 'making' me do anything I want to do. It is similar to a 'bluff' in poker. Seems legal to me.

Anyway, my original question was whether such a program might be attempting to 'discourage' a price rise following a period in which a stock has fallen dramatically (as would happen with scams), or whether the programming is more passive in nature - or very short term in nature only.

My example was CMGO - which despite reporting great earnings for 3 quarters the price has been very weak since the stock fell dramatically on failed expectations. Retailers are skiddish from that, but another possibility is that the mm program has a long-term element that takes advantage of that skiddishness not just on a day by day basis but because of that prior dramatic fall.