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Wednesday , March , 21 2018
Block Trades - All block trades are not created equal. Some are to be ignored and some are as good as gold?

Don't be fooled by institutional traders, investors and hedge funds...

Did you know that reported block trades are not really block trades, but a summation of total buying or selling in the past?  Hidden exchanges do not show their hand to the public in real-time. It is a false conception that people showing block trades are showing current trading activity but really showing past activity from days, weeks or even months ago. Are these traders lying to you? No they just don't know any better, the exchanges are brilliant at fooling most retail traders and investors. If you know they are buying, price will run up and they do not want any competition so they hide their order flow by going through secret exchanges and then report later in time.

Institutional traders and hedge funds are too smart to show you block trades in real-time since they know you are looking for them, so they hide their order flow by going to a hidden exchange. Traders saying these are dark pools or block trades are actually showing you an accumulation of buy or sell orders from past activities. They are NOT really block trades, but  a sum of orders that are consolidated and reported in the future at one time.

For example:  A hedge fund named XYZ Hedge fund want to buy AMD stock, so over a period of time they buy small orders not large blocks. If hedge fund XYZ want to buy 100,000 shares they DO NOT just buy 100,000 shares in one trading session that is a MYTH! They have an algo buy smaller lots until the 100k share purchase is complete by getting  less than 100 shares at a time using an algo to space orders out by time and space.

Once  XYZ Hedge fund purchased 100k shares of AMD, then past buy or sell activity is reported days, weeks or even months later. The block reported can have buy and sell orders mixed into one transaction. So now the traders says I see a block of 100K shares but that trade was processed over time in the past. They are no fools, they are great manipulators at using buy and sell algos to manipulate price so you cannot detect their activities.

MSP ALGO know this, so it does NOT look for blocks, but look for the buy and sell activities of the algos and sum up the activity  before the transactions are reported as a  block weeks or even months later. So the block trades that MSP ALGO report in realtime are not blocks you see reported during the day but tracking the beginning stages of small buy or sell orders in the accumulation or distribution process before the transactions are reported in one big block. I coded for institutional traders and exchanges at the Big financial companies in the past. I just wanted to level the playing field so all know what is truly going on. The current interpretation of block trades is really an illusion of reality. In reality it is just a bucket of buy and sell orders reported at a later date.

 by MarketSwingPlayer - Software Engineer - Trader