Larger size possibly increase win rate?

R

Risepoint1879

I've been asking myself this question recently.

Would trades be more likely to work out as position size increases?

Most intraday traders notice quick buying or selling spikes to signify support and resistance. So theoretically, if I got into a position with enough shares to create a noticeable push in a certain direction, that could influence other traders as a sign to trade in that direction as well, where they might have been on the fence about direction.

Could such a factor possibly influence win rate by a few percentage points...

I'm not talking about huge slippage, but something noticeable.
 
Risepoint1879 said:
I've been asking myself this question recently.

Would trades be more likely to work out as position size increases?

Most intraday traders notice quick buying or selling spikes to signify support and resistance. So theoretically, if I got into a position with enough shares to create a noticeable push in a certain direction, that could influence other traders as a sign to trade in that direction as well, where they might have been on the fence about direction.

Could such a factor possibly influence win rate by a few percentage points...

I'm not talking about huge slippage, but something noticeable.
More...

What would be noticeable on a stock which has an average daily volume of, say, 3 million shares?
 
You're probably going to have to exit your trade pretty soon if you want to make a profit from aforementioned market manipulation, which will be hard without having exactly the opposite impact (and thus slippage). I don't doubt some people do it (probably by using social media, followers etc.) though. But hey, illegal is illegal. If you're going to be making money this way you might as well rob a bank.
 
You pose an often repeated question. More size - more slippage and possibly more information value depending on the product. If your trade generates a "show" it generates institutional thought. So the answer is it all depends and a lot will be the product. If I go from 5 to 10 in the SPX no one notices. If I go from 5 to 5000 - now the calls begin as well as the electronic sniffers. One way the few remaining "physical" brokers earn a living is by information sharing and information can be gold. It could be electronic, but physical could be better(again product dependent).
It can't be spoofing and it needs to be big enough to draw attention.
 
Think about it this way:

- Each time you put in a passive order, you give away a free option to the market.
- Each time you put in an agressive order, you compete with other participants over the free options that are available.

The higher your position size the greater your advantage has to be when it comes to aggressive orders, since the availaility of free options are limited.

When it comes to passive ordes....well, post an order of 100k shares in the lit market to buy something like TIF, ABMD or SINA and see for yourself.


There IS however an advantage you might have when using bigger position size and that is queue position.
Let's say the market is 500for20/200@21. If you take the offer at 21 with 100 shares you have zero market impact.

If you post a buy limit order of 1000 shares at 21, you have taken the market bid at 21 AND you are the first in queue for 800 shares. If somebody joins you at 21, you have a free look for all shares that are behind you in the queue...which is a tremendous advantage.
(we asume that you really have taken the market bid and did not run into a hidden order)
 
Risepoint1879 said:
So theoretically, if I got into a position with enough shares to create a noticeable push in a certain direction, that could influence other traders as a sign to trade in that direction as well, where they might have been on the fence about direction.
More...
Theoretically? It is very practical! Most successful players MAKE their edge one way or another, imho.

How much money do you think one needs to paint a chart? Let's take a mid-cap stock ... How difficult is it to run it up and then push it down to some stupid fib level? Can you buy with confidence once you KNOW why it pulled back!?
Smoke and mirrors.
 
Risepoint1879 said:
I've been asking myself this question recently.

Would trades be more likely to work out as position size increases?

Most intraday traders notice quick buying or selling spikes to signify support and resistance. So theoretically, if I got into a position with enough shares to create a noticeable push in a certain direction, that could influence other traders as a sign to trade in that direction as well, where they might have been on the fence about direction.

Could such a factor possibly influence win rate by a few percentage points...

I'm not talking about huge slippage, but something noticeable.
More...

Your not George soros!
 
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