What causes a security price movement?

[Peter10]

y

Be both the buyer and the seller and sell higher than the current price if I want price to move up or sell lower if I want it to move down

nt

if you sell at a higher price than the current price, then there is no guarantee your order will be executed, who will buy from you, since there are more sellers asking a lower price.

 

[beerntrading]

@Peter10 I'm trying to understand but things need to make sense to me. If last price were the price at which last transaction took place it would be much to easy to manipulate price inducing others to start a trend in the direction you want. It can't work this way.

nt

It does...it's rife after hours.

Literally what happens is stock has BxA at 50.01x50.05 and someone comes in to buy 10,000 shares, but only 1k are on offer at 50.05, but they see a deep book has another 10k shares showing on the way up to 50.15. So buyer places limit at 50.15, takes all the liquidity, but fills the last shares at 50.12 because there was some hidden liquidity.

Farmers market example, restaurant comes in and quickly goes to all tables selling tomatoes, the $4 per lbs all the way up to the $8 per...and they do this with multiple buyers so none of the sellers realize everyone else is getting bought out. Turns out, guy selling at $6 per has a pretty good idea there's going to be a lot of buying, so he has 2 baskets under his table that you can't see, but he's happy to tell you about them and unload them at $6.50 per, knowing the $7 guy at the next table would be the next in line. But what happens if on the way to the market, the buyer spots the truck coming in loaded with tomatoes, which then gets stuck in traffic so buyer is the only one in the market who knows about its impending arrival? Instead, he hangs a sign around his neck, "will take all tomatoes, $3 per lb"

 

[Peter10]

It does...it's rife after hours.

Literally what happens is stock has BxA at 50.01x50.05 and someone comes in to buy 10,000 shares, but only 1k are on offer at 50.05, but they see a deep book has another 10k shares showing on the way up to 50.15. So buyer places limit at 50.15, takes all the liquidity, but fills the last shares at 50.12 because there was some hidden liquidity.

"

if bid and ask it at 50.01 and 50.05 respectively, it is not possible to enter a buy limit order at a higher price than the ask, buy limit order are only possible at a lower price.

 

[beerntrading]

if bid and ask it at 50.01 and 50.05 respectively, it is not possible to enter a buy limit order at a higher price than the ask, buy limit order are only possible at a lower price.

That's not true...it might be for some brokers, but no one trading size would be with that broker. This would cripple a large position on exit forcing them to show their hand.

Edit: Here's an intermarket sweep order like I was describing. The last order actually filled above the ask:

 

[Peter10]

That's not true...it might be for some brokers, but no one trading size would be with that broker. This would cripple a large position on exit forcing them to show their hand.

Edit: Here's an intermarket sweep order like I was describing. The last order actually filled above the ask:
View attachment 191665

why would you place a buy limit at a higher price? you can just buy straightaway with market order.

 

[beerntrading]

why would you place a buy limit at a higher price? you can just buy straightaway with market order.

The order in question is the two at 12:42. I suspect the one on CBOE was actually the first order and it just reported momentarily (.003 seconds) after NASDBX because of latency or something else. There were only 84 contract showing on CBOE (or, likely fewer, with some hidden liquidity behind them--and presumable none on other exchanges), so the buyer put in an order for 100 contracts as an intermarket sweep. This isn't a great example, because you can find order where the majority were filled above the posted ask when it was submitted. If you have a very large order and showed the whole thing at 1.30, anyone on the ask would see how much you want to buy, and just lift their offers knowing there's a lot of buying pressure and they can take higher prices. So, if you want to get a large fill, you put your limit order to eat up all the shown liquidity for the size of your position.

Say with this market, I want to buy 4,000 shares, and I'm not too concerned about a few pennies. I can see 500 listed at .34, 1300 more at .35, 100 at .40 (1,900 shares, so far), 1300 at .42, 200 at .44, and 1200 at .45 (total 4,600 shares showing). But there's probably some iceberg orders in there that has some hidden liquidity behind the shown shares. So if I want to be certain of a fill, I submit an order for 9.45 to all the exchanges simultaneously. But, because of hidden liquidity, I'll probably get filled on all the hidden liquidity plus the showing...so I'd be in 5-7k shares if that order was sent marketable to all exchanges. So, maybe instead, I take my chances at 9.42, hoping that there's enough hidden liqudiity there, but risk only getting filled at 3,200 shares. If you put in an order showing all 4,000 shares at 9.34, you'd get filled on maybe 800 shares, and people would lift their offers seeing you mean to buy. No one could ever get filled on a large order if they had to show inside NBBO.

 

[tommcginnis]

But what happens if on the way to the market, the buyer spots the truck coming in loaded with tomatoes, which then gets stuck in traffic so buyer is the only one in the market who knows about its impending arrival? Instead, he hangs a sign around his neck, "will take all tomatoes, $3 per lb"

Frikken poetry, man.

Beautiful.

 

[Peter10]

The order in question is the two at 12:42. I suspect the one on CBOE was actually the first order and it just reported momentarily (.003 seconds) after NASDBX because of latency or something else. There were only 84 contract showing on CBOE (or, likely fewer, with some hidden liquidity behind them--and presumable none on other exchanges), so the buyer put in an order for 100 contracts as an intermarket sweep. This isn't a great example, because you can find order where the majority were filled above the posted ask when it was submitted. If you have a very large order and showed the whole thing at 1.30, anyone on the ask would see how much you want to buy, and just lift their offers knowing there's a lot of buying pressure and they can take higher prices. So, if you want to get a large fill, you put your limit order to eat up all the shown liquidity for the size of your position.


View attachment 191667

Say with this market, I want to buy 4,000 shares, and I'm not too concerned about a few pennies. I can see 500 listed at .34, 1300 more at .35, 100 at .40 (1,900 shares, so far), 1300 at .42, 200 at .44, and 1200 at .45 (total 4,600 shares showing). But there's probably some iceberg orders in there that has some hidden liquidity behind the shown shares. So if I want to be certain of a fill, I submit an order for 9.45 to all the exchanges simultaneously. But, because of hidden liquidity, I'll probably get filled on all the hidden liquidity plus the showing...so I'd be in 5-7k shares if that order was sent marketable to all exchanges. So, maybe instead, I take my chances at 9.42, hoping that there's enough hidden liqudiity there, but risk only getting filled at 3,200 shares. If you put in an order showing all 4,000 shares at 9.34, you'd get filled on maybe 800 shares, and people would lift their offers seeing you mean to buy. No one could ever get filled on a large order if they had to show inside NBBO.

my argument is that if you place a buy limit order at a higher price, it is the same as a market order.

 

[novicetrader69]

y
if you sell at a higher price than the current price, then there is no guarantee your order will be executed, who will buy from you, since there are more sellers asking a lower price.

I said it, I can be both the seller and the buyer sides or, if this does not satisfy you, I can have a buddy that acts as the buying side to close the trade at a higher price. What I was trying to state is that if closing trades at a lower price or higher price than the current price is all that is required to move current price down or up respectively, we would be seeing agreed trades at a different price than the current be closed exactly only to push price in the wanted direction counting on others on other to follow once they see the price move.

Is my reasoning clear?


nt

 

[Peter10]

I said it, I can be both the seller and the buyer sides or, if this does not satisfy you, I can have a buddy that acts as the buying side to close the trade at a higher price. What I was trying to state is that if closing trades at a lower price or higher price than the current price is all that is required to move current price down or up respectively, we would be seeing agreed trades at a different price than the current be closed exactly only to push price in the wanted direction counting on others on other to follow once they see the price move.

Is my reasoning clear?


nt

so you mean your friend may place a sell limit a higher price than the best ask price and you will buy from your friend, thus pushing up the price right?

it cannot work like that, because your friend is not posting the best price at which you can buy. If you open a buy limit to buy at the high price your friend posted, it will be executed at as market order at the current ask price and your friend's order will remain unexecuted.