The problem with armchair trading is that it doesn’t take into account reality. It’s very easy to pick a stock and say “I’ll buy this if it breaks out here”.

This is exactly what I did with Tremor International (LON:TRMR) in my last column, which worked and – in theory – was a nicely profitable.

Unfortunately, I made absolutely zero money on Tremor this time, because of the market mechanics.

One gripe (of many) that I have with IG Index’s Direct Market Access platform is that it is not exactly what it says on the tin.

IG restrict certain order prices that are too far from previous auction price if they would trigger a new auction. The reasoning here is simple: if IG allowed all clients to trigger auctions then that is exactly what they would do.

But what this means is that when the current market price is close to triggering a new auction price, IG won’t allow clients to place limit orders that are relatively close to the market price on the stock. It’s prohibitive.

The problem becomes further more prohibitive in the morning auction. This is because the last auction uncrossing price is the closing auction. And if there has been market moving news between last night’s close and this morning’s open, then the price can already be at a level that is in excess of these thresholds.

When I read Tremor’s RNS that included the below statement, I was immediately pleased and guessed that Tremor would gap up and see momentum coming into the stock.

As a consequence of this performance, the Company expects trading for the year ending 31 December 2020 to be significantly ahead of the ranges outlined in its October 2020 trading statement, which were $340-360 million for revenues and $30-36 million in Adjusted EBITDA, and provided under caution due to the uncertainty surrounding the US election. The Company now expects revenues, net revenue* and Adjusted EBITDA to be in the ranges of $390-400 million, $171-175 million and $50-52 million respectively.

Indeed, that is what happened. But at 07:59 I entered my limit order (you should never ever use a market order in auctions as you are handing the market a blank cheque to fill you) I found that L2 Dealer had rejected the trade.

I tried again several times, but then it…

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