AGGU small pricing

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Topic Author
Neus
Posts: 263
Joined: Fri Sep 22, 2017 2:12 am

AGGU small pricing

Post by Neus »

So i’m trying to buy AGGU which is about 5 usd/share, but the broker warns that my purchase is above 500 share limit

what the hell.. 500 share is only $2500 :oops:

Is it ok to make larger order ie 2000 shares/transaction?
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Maple
Posts: 97
Joined: Fri Aug 07, 2015 11:46 pm

Re: AGGU small pricing

Post by Maple »

Neus wrote: Mon Jun 21, 2021 4:38 am So i’m trying to buy AGGU which is about 5 usd/share, but the broker warns that my purchase is above 500 share limit

what the hell.. 500 share is only $2500 :oops:

Is it ok to make larger order ie 2000 shares/transaction?
It is definitely ok in general to submit much larger orders. You didn't mention your broker. Different brokers can, of course, impose different rules and limitations on their customers. As a specific example, Interactive Brokers will give a warning for orders larger than some arbitrary share threshold, but this warning can be acknowledged and overridden by the user.

For larger orders, consider using limit orders rather than market orders, to optimize execution prices.
fwellimort
Posts: 784
Joined: Tue Feb 12, 2019 9:41 am

Re: AGGU small pricing

Post by fwellimort »

https://www.marketwatch.com/investing/F ... tryCode=CH

It seems AGGU has no liquidity.
This might hurt you greatly cause every buyer needs a seller and vice versa (in other words, price will dramatically rise more you buy [also an issue when selling]).

Most days I see have basically 0 trades.

Liquidity should be a huge factor when investing.
If there's no market of buyers/sellers, then while the 'actual assets' might be worth say $100, you will have to sell for $50 and so on (it works in reverse too. 'actual share price' might be worth say $100 but you might have to pay $300).
[this is highly exaggerated because market makers will 'somewhat' balance the arbitrage if it's notable for ETFs but you will still be paying above NAV (and selling below NAV)]

In general, I highly recommend against investing in stocks/ETFs with poor liquidity.
I know for instance in the US, you can move even known companies like $WEN by 10 cents for a short period of time with only 2000+ shares in certain times of day. And that's a stock that has average daily trading volume of 4.84 million.
AGGU in comparison has a 250 daily trading volume (penny stocks have more liquidity than this and pretty much everyone in industry is against investing (aka gambling) in penny stocks).

I would assume when you buy AGGU, you will have to pay huge premium (market makers will probably enjoy this arbitrage) and when you sell, you will have to pay a huge discount. Just doesn't sound like a good deal overall.
oogZoo
Posts: 74
Joined: Mon Sep 02, 2019 12:05 pm

Re: AGGU small pricing

Post by oogZoo »

fwellimort wrote: Mon Jun 21, 2021 12:39 pm https://www.marketwatch.com/investing/F ... tryCode=CH

It seems AGGU has no liquidity.
This might hurt you greatly cause every buyer needs a seller and vice versa (in other words, price will dramatically rise more you buy [also an issue when selling]).

Most days I see have basically 0 trades.
AGGU has liquidity at LSE. Seems you are talking about SIX.

https://www.londonstockexchange.com/sto ... mpany-page

Today's volume was 210,295 shares.

OP didn't mention which market it was about, so I guess it could be either. Too little details to comment anything.
Topic Author
Neus
Posts: 263
Joined: Fri Sep 22, 2017 2:12 am

Re: AGGU small pricing

Post by Neus »

Maple wrote: Mon Jun 21, 2021 12:34 pm
Neus wrote: Mon Jun 21, 2021 4:38 am So i’m trying to buy AGGU which is about 5 usd/share, but the broker warns that my purchase is above 500 share limit

what the hell.. 500 share is only $2500 :oops:

Is it ok to make larger order ie 2000 shares/transaction?
It is definitely ok in general to submit much larger orders. You didn't mention your broker. Different brokers can, of course, impose different rules and limitations on their customers. As a specific example, Interactive Brokers will give a warning for orders larger than some arbitrary share threshold, but this warning can be acknowledged and overridden by the user.

For larger orders, consider using limit orders rather than market orders, to optimize execution prices.
Thanks for the explanation

I do use IBKR
Topic Author
Neus
Posts: 263
Joined: Fri Sep 22, 2017 2:12 am

Re: AGGU small pricing

Post by Neus »

oogZoo wrote: Mon Jun 21, 2021 5:09 pm
fwellimort wrote: Mon Jun 21, 2021 12:39 pm https://www.marketwatch.com/investing/F ... tryCode=CH

It seems AGGU has no liquidity.
This might hurt you greatly cause every buyer needs a seller and vice versa (in other words, price will dramatically rise more you buy [also an issue when selling]).

Most days I see have basically 0 trades.
AGGU has liquidity at LSE. Seems you are talking about SIX.

https://www.londonstockexchange.com/sto ... mpany-page

Today's volume was 210,295 shares.

OP didn't mention which market it was about, so I guess it could be either. Too little details to comment anything.
Sorry, i thought AGGU only trade at LSE?

ADV of 210,295 seems liquid to me
glorat
Posts: 905
Joined: Thu Apr 18, 2019 2:17 am

Re: AGGU small pricing

Post by glorat »

fwellimort wrote: Mon Jun 21, 2021 12:39 pm It seems AGGU has no liquidity.
This might hurt you greatly cause every buyer needs a seller and vice versa (in other words, price will dramatically rise more you buy [also an issue when selling]).

Most days I see have basically 0 trades.

Liquidity should be a huge factor when investing.
If there's no market of buyers/sellers, then while the 'actual assets' might be worth say $100, you will have to sell for $50 and so on (it works in reverse too. 'actual share price' might be worth say $100 but you might have to pay $300).
[this is highly exaggerated because market makers will 'somewhat' balance the arbitrage if it's notable for ETFs but you will still be paying above NAV (and selling below NAV)]

In general, I highly recommend against investing in stocks/ETFs with poor liquidity.
I know for instance in the US, you can move even known companies like $WEN by 10 cents for a short period of time with only 2000+ shares in certain times of day. And that's a stock that has average daily trading volume of 4.84 million.
AGGU in comparison has a 250 daily trading volume (penny stocks have more liquidity than this and pretty much everyone in industry is against investing (aka gambling) in penny stocks).

I would assume when you buy AGGU, you will have to pay huge premium (market makers will probably enjoy this arbitrage) and when you sell, you will have to pay a huge discount. Just doesn't sound like a good deal overall.
This is not entirely true due to the way authorized participants works when making the market for ETFs. This gives a lot of inherent protections in what you describe by guaranteeing a level of liquidity even if there is no trading volume.

The way to measure the problem is to look at the bid/ask spread on a quiet trading day with no volume. Vanguard tends to have spreads of about 0.1% and iShares are even tighter. Check for yourself that you are happy with the bid/ask spread.

p.s. Can someone post the reference to Vanguard's explanation on authorized participants and why lack of daily volume is not directly an issue at all
Topic Author
Neus
Posts: 263
Joined: Fri Sep 22, 2017 2:12 am

Re: AGGU small pricing

Post by Neus »

fwellimort wrote: Mon Jun 21, 2021 12:39 pm https://www.marketwatch.com/investing/F ... tryCode=CH

It seems AGGU has no liquidity.
This might hurt you greatly cause every buyer needs a seller and vice versa (in other words, price will dramatically rise more you buy [also an issue when selling]).

Most days I see have basically 0 trades.

Liquidity should be a huge factor when investing.
If there's no market of buyers/sellers, then while the 'actual assets' might be worth say $100, you will have to sell for $50 and so on (it works in reverse too. 'actual share price' might be worth say $100 but you might have to pay $300).
[this is highly exaggerated because market makers will 'somewhat' balance the arbitrage if it's notable for ETFs but you will still be paying above NAV (and selling below NAV)]

In general, I highly recommend against investing in stocks/ETFs with poor liquidity.
I know for instance in the US, you can move even known companies like $WEN by 10 cents for a short period of time with only 2000+ shares in certain times of day. And that's a stock that has average daily trading volume of 4.84 million.
AGGU in comparison has a 250 daily trading volume (penny stocks have more liquidity than this and pretty much everyone in industry is against investing (aka gambling) in penny stocks).

I would assume when you buy AGGU, you will have to pay huge premium (market makers will probably enjoy this arbitrage) and when you sell, you will have to pay a huge discount. Just doesn't sound like a good deal overall.
Hm from the link you give, perhaps they mean 253,78 thousand?
TedSwippet
Posts: 3753
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: AGGU small pricing

Post by TedSwippet »

glorat wrote: Tue Jun 22, 2021 8:28 pm p.s. Can someone post the reference to Vanguard's explanation on authorized participants and why lack of daily volume is not directly an issue at all
This paper?

Understanding ETF liquidity and trading | Vanguard
glorat
Posts: 905
Joined: Thu Apr 18, 2019 2:17 am

Re: AGGU small pricing

Post by glorat »

TedSwippet wrote: Wed Jun 23, 2021 2:35 am
glorat wrote: Tue Jun 22, 2021 8:28 pm p.s. Can someone post the reference to Vanguard's explanation on authorized participants and why lack of daily volume is not directly an issue at all
This paper?

Understanding ETF liquidity and trading | Vanguard
:sharebeer
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