This post refers to the old "for every buyer there is a seller" etc. & "one side more aggressive" etc.
Vlad makes his case. IndexTrader says he "hit the nail on the head".
HOWEVER: While I agree in essence with what Vlad says (as I usually do...Vlad is one of the true bright lights on ET IMO), I think his explanation is a bit convoluted. Here we have two completely different scenarios.
First, the unfilled orders. Naturally, the guy with a limit order to sell his $10 stock for $100 is not getting filled. So obviously here we have a seller without a buyer. And this is meaningless.
In the second, and more pertinent example, Vlad has his 100k shares to sell, and 10 buyers bidding up the stock. The way I read it is that this competitive bidding somehow ends up with the highest bidder getting all the stock. This is not how it works in real life. FOK orders (not serious orders IMO) or AON orders (also, in large size, orders I would not consider serious) are not typical. Maybe I look at an Instinet terminal too much and it has made me too cynical.
What is described would be a scaling up of the price of the stock as the shares are bought piecemeal. If it is a MOC order, then yes, the specialist will line up his buyers, and if he has enough market orders (or marketable limit orders) they will all end up paying top tick. And if this is the case, you can rest assured that a little frontrunning will occur by the guy in the $3k suit. But take the same trade to the floor during trading hours, and the 10 buyers are getting fills as they are bidding up the stock. At prices that rise incrementally. Also, in real life, Vlad would not likely put his 100K shares out at once (at least not in his personal account
) Unless he were selling into extraordinary up movement, the likelihood of the 10 buyers bidding UP the stock is far less likely to happen than if he legged out of his long position. (all this on the assumption we are talking about a real listed issue that can be hypothecated. Not some WCOM or NT ....however they trade these days if they trade at all). So while I have to agree with the "not necessarily" answer in principal, in the strictest sense it all really is because of either imbalances, which adjust during market hours, or buyers and sellers that do not have "serious" orders placed. There is ALWAYS a seller for every issue. And there is ALWAYS a buyer for every issue. It is a matter of agreeing on a price. The socks I am wearing are definitely for sale if someone wants them for $100 dollars. And I am always a buyer for a new Porsche at the same $!00. GTC for sure!!!!!Peace,
rs7
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