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Titanium Metals Corporation Message Board

  • mazzolata mazzolata Apr 18, 2012 3:44 PM Flag

    Stock Manipulation and Distribution

    This stock has been under heavily manipulation and distribution by an algo for the last ~10 days or so -- the algo marks up the price above VWAP and distributes the stock at above VWAP prices.

    (VWAP is often used as a trading benchmark by investors who aim to be as passive as possible in their execution. Many pension funds, and some mutual funds, fall into this category. VWAP is used in algorithmic trading. Indeed, a broker may guarantee execution of an order at the VWAP price and have a computer program enter the orders into the market in order to earn the trader's commission and create P&L.)

    Why is it a distribution and not an accumulation?

    The algo marks UP and keeps the price above VWAP, it means the algo is distributing (selling) the stock (if it were buying, or accumulating, the algo would mark DOWN and keep the price below VWAP).

    From Investopedia:

    "The theory is that if the price of a buy trade is lower than the VWAP, it is a good trade. The opposite is true if the price is higher than the VWAP".

    Read more:
    http://www.investopedia.com/terms/v/vwap.asp

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