Care to explain how supply and demand of stocks (through stock buying for long position, or selling from long position and short sales) lead to moving of stock prices up/down?
So a stock is worth exactly what the price is trading at at any given moment mark-to-market. Basically every stock has a bunch of bids and ask limit order in the order book. This is the liquidity in the market. Stocks are continuously traded and positions continuously mark to market correct?
To move prices up or down will involve someone wiping out all the bids or asks that are currently in the order book by taking away the liquidity (filling those orders). Or alternatively, those who put in the limit orders in the order book will have to change their limit prices on their own free will based on a change of their opinion on the worth of the stock. So this is how the market is arrived.
So the most ideal market is one with extremely high liquidity so that no single entity can "wipe out the bid ask stack" by filling all those orders and then move to quote for a significantly different price shortly thereafter? E.g. a short seller can't hit all the bids $10, and then the order book is blank and then go on to quote at $2 to scare everyone off as if the stock is now worth $2, what was just worth $10.
But if someone could do that, say have enough money to wipe clean the limit order book to significantly move a market, and then requote lower, could they effectively "reprice" a stock on their own? Because once they've wiped out the limit book and moved it lower, they can flash quotes at a significantly different price, and now the market thinks this is now the new equilibrium for the stock (the new worth of the stock in the market's eyes so they think) and everyone else starts quoting bids/asks around this new price thereby causing trading to be significantly changed/repriced on a permanent basis?
So a stock is worth exactly what the price is trading at at any given moment mark-to-market. Basically every stock has a bunch of bids and ask limit order in the order book. This is the liquidity in the market. Stocks are continuously traded and positions continuously mark to market correct?
To move prices up or down will involve someone wiping out all the bids or asks that are currently in the order book by taking away the liquidity (filling those orders). Or alternatively, those who put in the limit orders in the order book will have to change their limit prices on their own free will based on a change of their opinion on the worth of the stock. So this is how the market is arrived.
So the most ideal market is one with extremely high liquidity so that no single entity can "wipe out the bid ask stack" by filling all those orders and then move to quote for a significantly different price shortly thereafter? E.g. a short seller can't hit all the bids $10, and then the order book is blank and then go on to quote at $2 to scare everyone off as if the stock is now worth $2, what was just worth $10.
But if someone could do that, say have enough money to wipe clean the limit order book to significantly move a market, and then requote lower, could they effectively "reprice" a stock on their own? Because once they've wiped out the limit book and moved it lower, they can flash quotes at a significantly different price, and now the market thinks this is now the new equilibrium for the stock (the new worth of the stock in the market's eyes so they think) and everyone else starts quoting bids/asks around this new price thereby causing trading to be significantly changed/repriced on a permanent basis?