Stock Prices and Traders. Part 1: Intro to pricing and speculation

Trading on the WSE, just like in RL can be exciting and profitable. But also like RL, at times it can be down-right frustrating!
There are many traditional market tactics that can be exacted for short-term gain and many of these (and I will refer to these as such) "scams" are being used in WSE and similar Virtual Stock Exchanges in order to deceive new-comer investors. This hurts everyone in the long run (and usually the short term too!) and frustrates those of us that are following the virtues of the exchange in order to see it mature. Just like SL, as we move away from the "Wild West" and into a mature, developed and "safer" economic landscape.
Many RL investors/punters/speculators know of the common "pump and dump" type scenarios that over-inflate the price for holders of the stock to sell at. Although not as thoroughly executed as RL penny stock fraud of which there are many similarities, the current events in the WSE market are causing issues with investors and analysts alike.
BID/ASK and the difference between them, gives you the SPREAD. Generally, a stock trading with a lower spread, has less volatility in it’s pricing and is a sign of an efficient market. But I will show you how this may not be the case.

For example, let's take a look at one of our closely watched stocks and for reference, we will use the current stats on SLQuotes.

Speculators cause a significant increase in short-term market volatility. On a positive note, a heightened level of volatility implies the market will be able to correct to mispricing more rapidly. But investors being led into this speculative purchasing on small volumes could see further speculative purchasing in the hope that the price will continue to rise…bubble gets bigger…POP! Everyone loses. I won’t implicate any of these stocks here at this stage, but lets take a look at one that “could” have:

(AMA) is currently trading at $L0.25. Over the last 7 days, the price has seen a roller coaster of 0.26, 0.31, 0.21, 0.28, 0.26 and yesterday 0.06. Even with fees for sell trades, getting in on the lows and selling on the highs would have turned a good profit, BUT, here are the volumes for those days: 201, 2, 1, 1, 430… completely unreliable and pure speculation.

There is no easy way out of this, it seems it just makes it more difficult for analysts and part-time investors to study the markets and make informed choices.

I will discuss this further as I talk to some other analysts and investors, maybe even LukeConnell Vanderverre.

Kind regards,

Logansan Oh
-CEO, Chairman