I have a question about trades that I see on some lower priced stocks...

I'll be watching the trades go by in real-time, and I will see a ton of 100 share trades go by for a stock priced at $3 or $4. And, by a ton, I mean that most trades are for the tiny amount.

For some low priced stocks, I don't see that... like SIRI for example, most trades are at least $2K+. But, some stocks I watch have just a boatload of $300-500 trades. By boatload, I mean if you were to make a list of each individual trade, you would see that more than 25% of the trades are for 100 shares.

Are these trades real? Or, is it just the MMs playing games? I have always wondered. I mean, I obviously don't expect everyone to be buying and selling in large amounts... but $300-500? That can't be the normal trade size, can it be? And, I'm not talking about tiny volume stocks... I'm seeing this in $3-4 NASDAQ stocks with average of 500K-1MM volume (small volume in terms of actual dollar amount). What's the deal with all the 100 share blocks at < $4 a share?

Any insight would be appreciated.

-RMJ

Black box funds ldo. You want them to buy 500k shares a pop at $3?

Najdorf,

I can't tell if you're being sarcastic or not, so I'm going to assume you're not.

What's the point of 100 shares at a time? 1K or 2K shares of a $3 stock is not going to move the market. For the stocks in question, the bid/ask is often 5-20K on both sides.

I just don't get it. I simply do not understand why there should be a lot of 100 share trades, unless the group of MMs is somehow on a rationing system. Like, if someone buys 800 shares, then 8 MMs each get a 100 share piece.

Anyway, is there just no answer to this? I really am curious, because I find it strange.

-RMJ

When I do limit orders they usually fill at 100 shares at a time. That could be what your seeing, do these trades normally happen really fast, or just 100 shares then nothing for awhile, then another 100 shares?

For example, If I buy 400 shares of SIRI at a limit price of $3.00 (just making that price up), it will show up in my account as:

Bought 100 shares of SIRI at $3.00/share
Bought 100 shares of SIRI at $3.00/share
Bought 100 shares of SIRI at $3.00/share
Bought 100 shares of SIRI at $3.00/share

Shoe,

Yes, often they happen fast... but what makes no sense to me is why would it do four 100 share trades? And, not just one 400 share trade?

It would seem to imply that there were 4 different buyers/sellers of 100, and thus your 400 share order was filled by hitting all 4 bids or asks.

Or, am I mistaken and this can't be inferred?

-RMJ

False assumption. Often it does. Chunking the trades thru black box order routing systems also masks the trades. If I save a penny by making my order smaller, that's $1. If I do 1000 trades [not stocks, just trades] a day that's $1000. Over a year that's $250k. Most pro black box programs trade way, way more than that and so do some daytraders.

Some stox are dominated by retail, who do buy in 100 share blocks anyway. New daytraders gotta learn somewhere as well.

There are also people on the other side who may want to do the reverse in small size, so even if YOU want 2k shares, you may get them from 20 different sellers or programs. Then there are limit orders on top of that.

You asked, I answered.

Najdorf,

Thanks, I guess that explains it. I really had no idea about that, and I guess that makes a lot of sense.

So, a typical small time retail guy can't specify that their trades be broken up like that, right? Or, I suppose there's just not enough of a reason to bother with it.

-RMJ

More likely is that people (market makers are people too) like to hide the size of their bid or offer. If someone wants to buy 2000 shares of something, they don't want to tell the world that. They would rather keep their true intentions secret. There is a mechanism in the Instinet and ECN order systems to show a size, and then hide the real size of their bid/offer. So they would bid 2000 and show 100 shares. The 100 is what shows up on the Level 2 quote screen. If someone hits it for 800 shares, it fills 100 and then auto-refreshes 100 shares at a time until the full size is filled. On very liquid stocks you'll often see bigger sizes published, but on slower movers it's typically 100 that's shown.

Dark markets have taken ECNs/Instinet to the next level. Its really quite amazing.

Its algos and / share commission schedules.

I'd suggest this, from my floor days:
If a market is slow, and the market is 3.05 bid at 3.10.

Broker has 8,000 to buy at 3.10 on a stop.
you buy 100 at 3.10
Broker announces 3.10 bid for 8,000
I happen to have 8,000 @ 3.10
bam... I sell 8,000 at 3.10, when the market is 3.05b/3.10a

Now, assume broker has to sell 10,000 at 3.05 on a stop.
I'll sell 100 @ 3.05.
"3.05 bid for 10k."

Since you dont know where the stops are, you might have to place feeler trades out there.

I didn't trade stocks (futures), so not sure if this is it or not. Doesnt work too well electronically either.