Has anyone here successfully bought shares on London Seats via Swissquote? I have tried on multiple occasions, and even though it appears there have been shares sold below the price I have bid, my bids never seem to be taken up.

I have phoned SQ twice. The first time I got an unsatisfactory explanation that I was bidding for too high a volume (we are talking about penny shares here, so high volume does not mean large amounts of money!) or that someone had bid earlier than me. However, I was able to show them that this was not the case.

They then said it would be because someone did a market bid, but I find this unlikely, because when I see the share price history on other sites, they include bid and ask prices, suggesting that they weren't market bids.

Personally, I think there is something wrong with their system. I haven't had any problems on any of the other exchanges, just London Seats.

Anyone had any experience here?

I solved my problem on a third phone call - I'm too new to this and didn't realize that penny shares were traded differently. There was nothing wrong with their system.

Anyway, now I'm wondering if anyone has used SaxoTrade? Their fees are a lot lower and I'm considering transferring to them, if I can bear the initial expense of penalty fees from SQ, and they allow my transferring of shares to count as my initial deposit with them.

I find SQ fine, by the way, it's just that trading anywhere other than Switzerland is quite expensive.

kfc.

What was the issue then? What is so different about penny trading?

Someone else step in if I still haven't got this right!

The penny shares aren't bound by the same regulations as the main LSE. This means that if you put in a bid for a share at the price that someone wants to sell it for, there is no obligation for this trade to go through (assuming you are the first bidder for an appropriate number of shares, etc), whereas it always would go through on the LSE (given provisos above).

In fact, the market maker (MM) who is looking after the stock, and also needs to make money on it, has no obligation to take any trades at all. He or she can just reject it on the basis that they don't like your name.

This is in part because the MM has to guarantee the liquidity of the stock. If a financial report is due that will cause a lot of people to want to buy shares in that stock, the MM may wish to stockpile shares and they can manipulate the market to do this. For instance, the MM may increase the ask price beforehand to encourage people to sell before the big rise so that the MM can then sell them on later at the higher price. Or the MM may refuse to sell or put a limit on the number of shares you can buy. Alternatively, the MM may wish not to have the share price rise too quickly and therefore may not want people to sell too many shares, so even a high bid for a particular share may fail.

Whereas in the "normal" market, I just try to guess a lowest price, place a bid, and wait to see if the shares will sink to that level, in the penny share, alternative investment market, this won't usually work since the MM wants some of the profit. This MM basically sets the bid and ask price. The bid price is the lowest and the ask price is the highest. Whereas in the "normal" market, you try to bid at the lowest price, in this market you often have to bid the ask price in order to get the share - not higher and not lower. But you can sometimes buy at lower than the ask price, but it depends on the share and the MM. And perhaps you can sometimes buy higher too if they are expecting and wanting the price to rise (I've not experienced that personally, though). As the guy on the phone said to me - you have to guess what the MM wants to do (as well as guess where the shares are going in term of price, but you will never buy at the lowest share price; the shares will always be sold [and held by MM to resell] at the lowest price).

I hope that was comprehensible and at least 80% accurate! No guarantees....

Given all of this, I'm wondering why anyone would want to invest in such stocks????

Jim

Because it's fun! They are riskier, but also carry more potential for gain (and bankruptcy) than the larger market. They need the intermediary (MMs) because they aren't traded enough to ensure enough are available to buy and sell otherwise. At least, that's my understanding.

I'm off on holiday tomorrow, so will have to drag myself away from obsessing about it all (I'm that sad at the moment!).