What is the SEC standard for pricing (OTC) stocks in my broker acct? H/L Bid, Ask, Last Close?
An OTC stock (very stable, 100yo company) in my portfolio has suffered massive swings in price "most recent price" in the last week or so. I am not concerned about the stock, or the price. I want to be clear.
My issue is how my brokerage is pricing the stock.
Since its purchase, the stock appeared stable and matched the last sale price. That price was visible on otcmarkets and otcbb as well as a host of other sites.
A few days ago, the price was down 40%+/-. I called the brokerage and was informed that the price is based on "the lowest active bid". It took the trading rep 20++ mins to get back to me on this.
Today, the stock is up 47% which matches the highest active bid on otcbb and otcmarkets.
On their website, in my portfolio it states basically that securities are priced at days close and if that is not available, the last price traded – or something to that affect.
So, I am mystified at how this (all stocks, all OTC stocks??) are priced (by my brokerage).
What is the industry standard and SEC guidelines in this regard?
Why would a stock priced be based on a bid anyway? At least the ask is far closer indicator of price. When the stock is thinly traded is not the best price the price the stock last sold/traded at?
Do I have an issue here? Do I have a serious issue here? I am in the process of attempting to acquire a large amount of this stock and I am panicked by he price swings and the havoc it creates in my portfolio. Is this an issue that needs to be brought "higher up the food chain"?
For reasons I don’t want to bore you with, I can’t leave the brokerage for 18mos and this imo a critical time to acquire this sock.
My last emails have gone unanswered. An email response that was returned was full of generalities that had little or nothing to do with the issue – canned pap. Email prior to that still unanswered.
Please feel free to email me from an anonymous address if you fee any way liable. I need some answers.
Trading indicators are best used along with money management and good risk control, using trading indicators alone will not enable you to be a successful trader, even if you learn everything about swing trading indicators the market is just too random and unless risk is controlled, over time your account will slowly get wiped out, regardless how good a “trader” you think you are.
This question was about swing trading indicators and there have been some pretty good answers that should help in your trading, and especially in relation to swing trading indicators, the answer has been posted in the categories listed below:
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July 7th, 2010 at 2:22 pm
sec standard–end of day price or last sale (during market hours)..
if you have a stock that is very illiquid (very few trades per day), they might use highest bid but I have never heard of that..it would make sense if its illiquid, the highest active bid is really what its worth..
July 7th, 2010 at 2:22 pm
This is relatively normal in thinly traded stocks. What is happening is that the market is very uneven and the last sell or buy may not have a counter sell or buy, meaning that the trade is taking place at the market maker’s level. Thus, the last bid may be the accurate price for the stock (the stock may have sold out of the trader’s portfolio and as such was the last trade).
Obviously, your main issue is with the lack of liquidity in this stock, not with the brokerage.