How do I gauge how many shares of a stock I can purchase or sell without effecting it's price?
October 24th, 2009
For example, say we have a security with price & avg daily vol of 1m share. That’s m a day infused into the stock divided by 390 (the # of minutes in a trading day) that’s about ,200 a minute that changes hand in that stock. If I see a trading opportunity and want to buy 0,000 worth of stock that minute how will that affect the price? Is there a factor like 2X, 3X, 4X, etc that I can use to know how much more (or less) than the normal 1 minute dollar flow I can successfully trade. Also, I use limit orders so I can’t just put in a market order and accumulate shares over a few minutes until I’m filled. This is a day trading strategy so price is very important to me and often times I need to get filled that minute.
Thanks for the help!
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Posted in Stock Market Basics | 
Tags: 102 Minutes, 1m, 3x, amp, avg, day trading, Dollar, few minutes, Gauge, normal 1, Shares, stock, Stock Purchase, Trading Strategy
I hope it’s a hypothetical question because if you were to implement the strategy you are likely to be fleeced.
You don’t have enough information. Every stock is traded by a handful of specialists / MMs who have a good feel for it and can easily spot an abnormal activity, an outsider, and outsmart them.
If you want to trade against them you have to do the same - watch the stock until you get a feel for it. There are too many games you have to be aware of to list them all here. Having Level II and knowing who the players are is a first step. How your bid size (5,000 shares) compares to the current ask is a second. Suppose there are 10,000 shares at the ask. You shouldn’t have a problem. But what if there is only 1,000? What if there is a seller who is not showing his hand? Or a shrewd trader spots you, jacks up the price on your order, sells you 5,000 shares by going short on the spike, drops the price back and covers? And so on…
The prices of stocks are governed by institutional trading, like banks and mutual funds. They are really the only ones who own enough shares to move the market.
While $100,000 may seem like a lot of money to you, it’s not enough to buy one share of Warren Buffett’s Berkshire Hathaway stock.
Bottom line, you’re not going to affect the stock price with a $100,000 trade.
Are you talking about buying shares of stock on the market by electornic trading with a TD Ameritrade or some other company.???
Throwing 100G in the stock markekt on one stock will not affect the price–OK — Not one nickel…
\Back in 98–a wealthy oil shiek in SA bought $50 million in stock and the market did not move. Not one nickel… Intel still went down… ..
Binary woman is correct, you will not affect prices with your tiny purchase….
UNLESS….you buy penny stocks. In which case your $100,000 and you will part company even sooner than if you attempt to "trade" a $20 stock!
Day traders don’t make money as a rule. A small percentage stay afloat based on shear dumb luck, not judgement, though of course THEY are convinced it’s because they are smart…right up to that moment when they get cocky enough to lose everything!
Let me tell you know that 95 percent off all Americans do not know how to invest in the stock market so go out there and do your own research.
Start reading the top nespapers suck as the New York Times, Wall street Journal, Chicago Tribune, In the business section of these great newspapers you will find great advice about companies that you can invest in.
Once you find information about the companies you can invest in, shoot over to yahoo!finance. look at all the companies financials, and determine were they are headed.
Get some books such as Jim Cramer watch CNBC.
"How do I gauge how many shares of a stock I can purchase or sell without effecting it’s price?"
Hilarious!
The only way you can determine this is by measuring how much money you have. If you ever have enough money to affect the price of stocks, do yourself a favor and walk away.