Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I have been very interested in Block Trades for a very long time, but a couple of days ago I had a new question that I had never considered before. I hope someone, more knowledgeable than myself, knows the answer.
I see Block Trades in Green and Red, also Black and I never know how to interpret those. I have always assumed that Green indicated they were buying and Red indicated they were selling. Correct me if I am incorrect.
So my new thought was this: Is it possible for a Block Trade to be done as an entry to the Short side (selling), which would mean they will buy at a later time when they cover their short position.
I ask this question because as a small trader, we must borrow shares from the broker in order to short them. On a huge block trade, are they able to borrow shares? I am now wondering if all Red block trades are exits from a previous long entry. Are they able to borrow shares for shorting Block Trades?
Unfortunately, no short on individual stock unless you get an approval from the brokerage account. You can do it on futures market(Index) without any restrictions.
Post an image of what you are talking about because Time and Sales, for instance, show trades (whether or not they are blocks) as green if it was done on an uptick and red on a downtick regardless of whether the uptick was for a long entry or short cover or downtick was a long exit or short entry.
Block trades are private transactions that are reported AFTER it has been transacted to lessen the impact on the instruments price.
There is absolutely no way of knowing for what purpose any block trade is being executed. How would you ever find out if the Sell side of the block trade is selling existing holdings or naked shorting? Fact is you don't. As such, it is wasting time and effort to try and work out when it may be un-wound or why it was transacted.
Block trades are traded in size so it's not retail clients but large institutions who have tremendous capital behind them Their ability to borrow/hedge/provide margin/access to markets, is far greater than retail can even imagine. It's a different playing field all together.
Hi, most large trades are OTC in the spread by MM. You can check them at the end of the day at FINRAR. All dealer transactions OTC have to be reported after the market closes.
So if you see a big trade that you want to check go to December 2020 Daily Short Sale Volume Files . Remember that if your summation is correct, Short is Long and the inverse. So turn the figures upside to see if the big trade was buy or sell. If a MM sells short to a big player, the big player is long thr stock and vice verser.
I'm developing a tool/site to display this in a better way.
If you don't mind paying a subscription fee, Matt Z' offers a great service and the best explanantion for lay people to this at squeezemetrics. https://squeezemetrics.com/monitormonitormonitor/download/pdf/short_is_long.pdf
Cheers Bg
Question is does it really matter who bot or shorted?
For every trade there is one guy on either side anyway. So even if they will buy back those shares later on remember there is a guy who bot them and, assuming the price was going down (which I assume it was...), guess what this guy is gonna do once the market pulls back?! Sell the shares of course to try to break even.
Block trades do not necessarily involve one institution to another institution. Many times one entity has a large block to sell/buy and contacts other entities to take the other side of the transaction. You really can't tell.
Persistence! Nothing in the world can take the place of persistence.
Talent will not ... nothing is more common than unsuccessful men with talent.
Genius will not ... Unrewarded genius is almost a proverb.
Education will not ... The world is full of educated derelicts.
Persistence and determination alone are omnipotent! Calvin Coolidge
The tool that I am using is located as a Tool on StreetSmart Edge which is Schwabs trading platform. There are other brokers, and scanners, that offer similar Block Trades reporting data. I have the tool setup to only view trades on the NASDAQ.
In the attatched image, I have the first list setup to show Blocks that have occured greater than 750,000 shares.
In the second list, I have the filter setup to show trades greater than 1,000,000 shares.
The first trade on the first list is RTX for $73.91/share, a small Block Trade of only 930,000 shares for a total value of $68,736,300.
Most of these trades are posted immediately after the markets close.
In doing so, they are satisfying the FTC reporting rules, but the volume is not seen as volume spikes by average traders.
Sometimes there are large block trades, during the regular trading hours, and I am able to see them as volume spikes; but price does not follow the volume, to my untrained eyes.
I am amazed that there are so many people who think the size and direction of Block Trades are not relevant. If a Block Trade is over 10,000 shares and involves millions of dollars in value, how can those trades not be important. I am just trying to teach myself how to interpret the data that I see. I am endeavoring to try and follow the Smart Money.
But, perhaps the skeptics are correct because I have not been successful in tracking these large Block Trades and seeing any correlation in price movement.
It just seems to me that the laws of supply and demand dictate that these trades must be affecting the price, somehow.
Back to my original question: Are Block Trades ever an entry as a short, or must their entries into a trade always be a long entry. Before everyone tells me how much that doesn't matter, let me explain my thoughts. If I trade in harmony with the Block Trader then I need to follow his entries and not his exits. The entries are the direction he expects price to move, but his exits are after price has had time to move in his predicted direction.
I appreciate everyones comments - even the condecending ones. They are all helpful. Thanks for your help.
I think this could be interesting information if we could get it, although I'm not entirely sure what could be done with it. Your hypothesis, as I understand it, is that a trader is more likely to be showing his read of the trend when he initiates a position (long or short), rather than when he closes a position. This might be true much of the time, because initiating a position is perhaps a more aggressive action and may indicate conviction. (But not necessarily and not always.... bailing out of a position could also mean they thought the trend was over.) The idea makes some sense. Whether it can be tested or not is another question, but it might be interesting.
I would add that large players are not necessarily trading only to jump onto or out of a trend. For instance, big portfolios may have to be reshuffled based on changing assessments of risk, or changing investment criteria, or any of a number of reasons. Index funds have to rebalance by changing their allocations between different holdings as market caps change, to make sure their holdings are weighted the same as the index they mimic. A relatively small change in terms of portfolio size could involve a huge number of individual shares, just because of the size of the holdings involved. These changes, whether sells or buys, would not necessarily indicate a reading of the market trend, at least directly. More like housekeeping.
But, granting the idea, the major problem is going to be knowing whether a sale is unloading a long position or is a new short (or whether a buy is a new long or closing a short .) There is really absolutely no way to know this, even in trades executed entirely on the exchange. How the seller got hold of the shares to sell is their business and their broker's, and is not information that anyone else has. The buyer, of course, just receives the shares he bought, and doesn't know where they came from. The exchange doesn't know where they came from either. No one outside of the trader and the broker ever will.
Oh, yes.
I used to work in a bank that was either trustee or custodian for many of the pension plans of the Fortune 500-level companies. (I was just a starting-out clerk, not high up enough to qualify even as a cog in the machine , but I learned stuff.) We had a department called "stock loan" that did a brisk business loaning out shares from our customer's holdings, which were vast and beyond vast, to brokers who needed them, mostly for short sales (or any other situation where their inventory was short and they had to make delivery.) We got a nice piece of that action as did our customers. The other big banks on the Street did the same. The supply of shares to lend out is not infinite, but it is large.
10.000 shares is not a lot of shares from that perspective.
I think it makes sense to want to figure out the actions of the larger players, but I don't see how it's going to be possible to know whether a sale is short or not, given the available information. Sorry.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
)
for a total value of $68,736,300.