10 times in a row (definitely no coincidence) the price of a stock I was buying/selling jumped up/down immediately before my order was placed. Up if I was buying and down if I was selling. The last two times I actually just bought/sold to test if it would happen again, and surprise-surprise, it did. We’re talking about orders of around £2500.
Could anyone explain this as it seems very much like a scam?
If it’s a low-volume stock, it’s probably your transaction that’s making it move.
This answer. Get familiar with trading in more depth, e.g. you need to understand liquidy or bid-ask spreads. What Determines a Stock's Bid-Ask Spread?
Yes, I was following the market live on a different site and could see how my placing an order would suddenly push the price in one direction, which would then almost instantly jump back just after my order was complete. Could you explain this?
Example: The price is 100, I place an order to buy, the price immediately jumps to 110 (the price I am given) then jumps back to 100. Later, I sell with the price at 100, it immediately jumps to 90 (the price I am given) then jumps back to 100. This pattern repeats several times.
Is this how Freetrade operates?
It sounds like the bid-ask spread.
Which stock was it?
Picking a random stock on Hargreaves Lansdown. You can see there the buy and sell price is different. The more obscure the stock, the wider that spread tends to be.
Yes, as explained here. When you sell, you’re always selling at a lower price than the buyer is buying at, and vice versa for a buy. A middleman called a market maker takes the difference, which is called the spread. If trade volumes are low, the spread can be wide, i.e. 10-15%.
As others say, it could be the bid/ask spread.
Vote for better pricing information on the feature request below. I’m surprised it has not got more votes, but maybe the title could be changed to include bid/ask spread so it is easier to find?
You could use a limit order. This might look after this problem.
With aim/obscure stocks it might take a lot of waiting to allow it to arrive at the desired price though.
Better pricing info isn’t the solution. Quotes are
You’re never going to get the exact price on the ‘live’ feed because you’re always offered a price not given a historic/last buy price.
You’re only going to get what the buyer or seller is willing to offer. So quotes solve that issue by showing you what the price will be, not what the price was.
I think they would both help. The purchase confirmation form that we agree before purchase looks like a quote but is not.
I guess every platform has its foibles, particularly newly developing ones like FT. It has a double challenge of attracting new investors (like me) who don’t fully understand how it all works!
This is all about the spread and if it’s a low liquidity stock then the order book depth too.
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