Thread by @ugodre

Hello Twitter Fam, this a narration on a stock market phenomenon called 14.29.

Thread starts here

I promised I was going to do this some weeks back, so here is promised fulfilled.

The term 14.29 was coined by a very good friend of mine, we like to call Dexter. Dex as I personally like to call him is a phenomenon too

1/For most eagle eyed ardent retail investors in the Nigerian stock market, the term 1429 is a significant period when trading stocks.

2/Those of us who understand this term, also like to call it the 1429 protocol

3/But before I explain what it means, let me explain a few terms and activities in the stock market.

4/You will find them useful as we go on

A bid is when you place an order to buy stocks while an offer is an order to sell shares.

5/When total bid outweighs total offers for a stock, it is likely that the share price will rise.

6/If offers outweigh bids, it is likely that share price will drop.

Now, to online trading of stocks

7. Several stockbroking houses provide online trading platforms where you can

8/buy and sell stocks on your own and without the service of a physical broker

9/You place your bids if you want to buy or offer if you want to sell.

10/ And if your bids or offer goes through, you get an email confirming success

11/and the amount is deposited or withdrawn from your account depending on whether you buy or sell

12/ Online trading bears a similar characteristic to how you buy and sell stuff in the market.

13/ Imagine that you want to buy the famous shoprite bread which is sold hot at about 5pm daily.

14/ To be one of the first people who get to buy the bread hot, you will need to be in shoprite a few minutes before 5 otherwise

15/you might stay in the queue longer and in some cases, may never be able to get the bread.

16/ Online trading is like that too. The faster you can execute trade the easier it is to secure or unlock value in the market.

17/ Using the same Shoprite example, imagine a situation where bread prices are determined daily by the forces of demand and supply.

18/ That is, the opening price of bread, is determined by the closing price the previous day.

19/ And that the previous closing price is based on the last price bread was sold for?

20/ If you want to ensure the competition to buy your hot bread is reduced, then

21/ your best bet is to buy it just before they close and at a higher price. The stock market is like that too.

22/ Share prices move based when a certain quantity of stocks exchange hands.

23/ For some stocks, 50,000 units of a stock will have to exchange hands before a new price is determined.

24/ So, for example, if a share price of Nairametrics is N10 and 50,000 units was crossed for N10.5, then the new share price becomes N10.5

25/ The implication of this can run into billions of naira in market valuation for equities as you will come to understand soon

26/ If you do not take time, a stock that opened at N10 in the morning can close at N9 by close of business,

27/ losing N1 even though it traded at average of N10 all day long

28/ That is why sometimes, when you check the price your stockbroker tells you they bought or sold a share for

29/ against the closing price at the end of trade they are different and you think you have been gamed.

30/ You actually were not gamed. Share prices vary all day long & the closing price is the last price recorded at the approved volume change

31/ Now the 1429 protocol.

32/ The stock market opens at 10.30am and closes at 14.30 every trading day

33/ This makes the closing time of 14.30 very significant considering the explanation I gave earlier.

34/ Most companies have realised what the effect of their closing price can be on their market valuation and often play the 14.29 game

35/ At exactly 1429, some of them move into the market to the needful

36/ They carefully watch the price movement of their share prices all through the day

37/ and when they observe it could be closing lower the ghost appears.

38/ First, they use the speed of the market to ensure no one gets to the queue before them

39/ And then, use the might of their capital to bid for the shares at a price/ volume that will change d price of d stock in their favour.

40/ So, imagine that Nairametrics opened at a share price of N10 and we want it to close higher at N11.

41/ However, during trading, it drops below N10 as offers outgun bids. To ensure the hit your strike target of N11,

42/ the ghosts of the stockmarket will show up, placing bids at higher prices and mopping up the offers

43/ That action attracts a positive reaction from traders and in line with rational human behavior,

44/ start to also bid slightly higher or at least close to the current share price.

45/ In the event where the ghost realises that the share price will close below their target, they wait till 14.29 and then strike

46/ So as an innocent on looker, you see that a stock is trading at 9.95 at N2.25pm, just 5 mins before closing. You see offers but no bids

47/ And then conclude that the stock will close at N9.95. But unknown to you, the ghost has a different idea.When they see no one is bidding

48/ They appear at exactly 14.29pm and mop up the shares on offer at N10, thus ensuring that the share price closes at N10 and not N9.95

49/ That 50kobo gain is worth billions of naira in the greater scheme of things.

50/ So "market makers" as some ghost are legitimately refer to, can swing d share price of a company 2 any direction depending on their goal

51/ So next time u see a stock on a losing streak for most of intraday trading but closed higher or neutral,

52/ remember the phenomenon of 1429 protocol. The ghosts have simply moved in to guard what it "theirs".

53/ You are just a spectator in the grand scheme of things and can only hope that your interest aligns with theirs.

54/ You have to understand d side rules and intricacies of d stock market, if you want to win. Hopefully, I'd be doing more threads on this

55/ Thanks for your attention and may your days remain profitable.

*End*

I think Dex is actually on twitter as @OgbeniDexter