Hunt Order – this is what American traders call the application, which is automatically executed on any ECN or MM, leaving other bidders no chance to, to take liquidity from the supply or demand side.
Рассмотрим пример: stock TFM торгуется по цене спроса 50 cents and offer price 52 cent. But on the tape we see records in white, informing about the execution of orders for 51 центу. You can notice, that when one of the players tries to rise to this price, purchase requisition by 51 centu does not stay longer than a moment. But offers for the same price in 51 a cent is not picked up so quickly. Many bidders can join the bid for 51 центу, and wait in the execution queue. In this example, we are faced with a selling "bid-hunter", automatically executing all orders to buy at the price 51 cent. Simply put, this is a computer algorithm, who sells a share at a price 51 cent to any bidder – through any ECN or Market Maker.
If we see instant execution of sell orders at the price 51 cent, while nothing similar happens with bids for the same price, then the algorithm is ready to buy from any seller, who agrees to drop in price by 1 cent for the best offer price.
Let's think about the meaning of these applications.. Is this behavior more aggressive?? The buyer is ready to buy shares from absolutely any seller, and at the price of 1 cent above, than the current demand. It may be so, that the buying algorithm updates the order in a specific ECN at the best bid price not only for, to increase your chances of buying more stock, but also wanting to fulfill everyone, who will lower the bid price.
Like hidden claims, "Requests-hunters", on which a significant amount of shares passes, require our attention. This is especially true for stocks with large spreads.. "Bids-hunters", usually, need spread more 1 cent. Certainly, there are especially complex algorithms, but they are more difficult to identify and even more difficult to use these situations to your advantage.
It should also be borne in mind, that in passive shares there is a risk of encountering disinformation. Algorithms often switch automatically from the demand side to the supply side every few seconds.! Noticing something like this, better to bypass this game. The best opportunities for a trader are provided by those orders, which are easy to notice, including – due to the large volume of shares, которые они торгуют.
Do not forget about, that the best buy / sell signals are always confirmed by the actually traded volume of shares. "Application-hunter" for 2 000 shares don't mean anything, in contrast to the similar algorithm, made transactions on 200 000 Shares. If you have any doubts, let the stock show more volume before, how to act in accordance with the signal seen.
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