price pressure

V

vladiator

Hey, I have a quick question. Say there's a company of somewhere around 2 -3 bln capitalization and it has some abnormal event (e.g. earnings surprise) and large volume on it. If I were to buy about 2 or 3 million worth of that sucker within 10-20 minutes, how likely would my trades be to move the price? Would the answer be the same if I hid those trades? What approach would be best to minimize the pressure excerted by my own trades?
Thanks a bunch in advance.
 
I seriously doubt that there's anyone here that's ever bought two or three millions shares of anything.

That must be a hefty account you have there to afford a few million shares of anything priced above $2, especially if you want to maintain sane position sizing principles.
 
Quote from rgowka1:

read "Reminiscences of a Stock Operator"
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I looked it up and read some stuff about it. Looks like it might be of benefit, but it seems that the issues I'm interested are of more recent nature. I have no doubt it has some good wisdoms, but how applicable are it's discussions of liquidity to what is going on how given so much has changed since???
 
Quote from alfonso:

I seriously doubt that there's anyone here that's ever bought two or three millions shares of anything.

That must be a hefty account you have there to afford a few million shares of anything priced above $2, especially if you want to maintain sane position sizing principles.
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Thanks alfonso. I think some people on this board do trade large size (certainly not the median poster), and I was hoping to get their feedback. Scalability should be a concern to most traders except those who want to trade about the same size and just derive a source of income.
We are at a point where we might soon be getting investments from funds of funds and size may become a concern.
 
Quote from vladiator:


I looked it up and read some stuff about it. Looks like it might be of benefit, but it seems that the issues I'm interested are of more recent nature. I have no doubt it has some good wisdoms, but how applicable are it's discussions of liquidity to what is going on how given so much has changed since???
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It does discuss things like 'swinging a big line' - taking big positions - but it's not really applicable to your situation, where you need to have your purchases done in the next 10-20 minutes.

Did I read you correctly with your original question? You want to purchase 2-3 million dollars worth, or shares? If you're talking dollars, that would amount to about 50k-100k shares. If the news is seen as really big news by others and the volume gets going, then you should be able to get your shares without spiking the price much over and above what it would have done without you, especially if you're in early on the news.

If you're managing the kind of account size where other funds of funds are taking an interest, and news matters to you, it would certainly be worth getting a Bloomberg Terminal.
 
Quote from vladiator:

Hey, I have a quick question. Say there's a company of somewhere around 2 -3 bln capitalization and it has some abnormal event (e.g. earnings surprise) and large volume on it. If I were to buy about 2 or 3 million worth of that sucker within 10-20 minutes, how likely would my trades be to move the price? Would the answer be the same if I hid those trades? What approach would be best to minimize the pressure excerted by my own trades?
Thanks a bunch in advance.
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try it and let us know how it works.lol
 
Quote from alfonso:



Did I read you correctly with your original question? You want to purchase 2-3 million dollars worth, or shares? If you're talking dollars, that would amount to about 50k-100k shares. If the news is seen as really big news by others and the volume gets going, then you should be able to get your shares without spiking the price much over and above what it would have done without you, especially if you're in early on the news.

If you're managing the kind of account size where other funds of funds are taking an interest, and news matters to you, it would certainly be worth getting a Bloomberg Terminal.
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Yes, I did mean <i>dollars</i>. I do have a bloomberg terminal, but in this case it's not relevant, b/c by the time I open/close the position, the news is widely available. In fact, I HOPE it is :D.
But the volume usually remains fairly high on such days... Also, I trade around open/close when the volume is highest.
 
Quote from vladiator:

Hey, I have a quick question. Say there's a company of somewhere around 2 -3 bln capitalization and it has some abnormal event (e.g. earnings surprise) and large volume on it. If I were to buy about 2 or 3 million worth of that sucker within 10-20 minutes, how likely would my trades be to move the price? Would the answer be the same if I hid those trades? What approach would be best to minimize the pressure excerted by my own trades?
Thanks a bunch in advance.
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Your question is unanswerable as phrased. It completely depends on the name you are trading. $3 million is not a particularly large amount in a $3bill market cap, but it depends on the issue, float, market conditions, etc.

BEAS I think has a market cap around $3Bill, and you can buy $2 mill worth on the wire with the right guy. You can go to the floor in LEH with 20k to buy (less than $1.5 mill) and move the stock $.50, even though the mkt cap is around $15Bill.

You should be using brokers who will commit capital for you if liquidity is what you are looking for.
 
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