Taking a random example, here is a sample of market trading data for CRH.
http://www.sharecrazy.com/share2607share/share.php?disp=volume&order=0&epic=CRH
You can see that some trades are regarded as a "Buy" and others are regarded as a "Sell". However, even when a trade is regarded as a "Buy", then surely there must have been a seller? So what convention is being used to determine whether the trade was a "Sell" or a "buy"?
Hi all,
I provide the data for the link posted above, which is how I found this thread.
Each stock has a number of market makers (varying from about 20 for large FT-SE companies to 1 or 2 for smaller AIM/Plus Market companies) who hold the available amount of shares in issue between them.
In the link you posted, you will see a "Bid" and an "Offer" price. These represent the best price the company's market makers will either sell the shares to you (the offer) or buy from you (the bid).
Trade records are provided by the London Stock Exchange and each trade record is not identified as to whether it is a buy or a sell. Therefore, you have to make the assumption that if the traded price is closer to the offer price the transaction was a buy, and vice versa.
This is a far from ideal situation, particularly if the bid and offer prices are quite close together (the spread), and transactions that are actually buys can be assumed as sells etc.
Until the London Stock Exchange and FSA allow a level playing field where private investors are given the same level of information as institutions, this situation will persist.
The trade figures are basically a list of all the individual activity between the market and the market-makers that day. The amount of buys and sells are very unlikely to be the same.
Because of the margin for error, trade data should certainly not be relied upon as a basis for investment.
However, the data is not entirely useless. It will generally be very close to the getting the total number of buys/sells correct (whether each individual transaction is correctly assumed or not). Also, it gives lots of information about the frequency/size of trading and the type of trade that is being conducted.
This is a rather general description, but I hope it answers your question.
Cheers!