How can stock prices move so much even on low volume when in that have be no word?
light volumes days sometimes enjoy a huge swing...why?
Answers:
Low volume stocks are more susceptible to manipulation.
Quite regularly you trade against an MM who can sense any deviant amusement right away and manipulate the bid/ask as expected.
Let's voice you want to vend 500 shares of a daintily traded stock. The bid is for 100 shares, so is the ask, the spread is 25 cents. Chances are, the MM is on both sides. You put surrounded by an proclaim to trade 500 at the souk. The MM know within are no buyers around except for a few low bids at the curb. He fill the first 100 at the open market and drops the price to flood those ceiling buys. The stock take a dive and comes stern. Then a buyer comes contained by next to a 500 share buy. The process repeats within reverse. There are constrict sell above that get hold of chock-full, after which the stock returns to the ingenious bid.
No communication? You stingy no report the public know give or take a few. There could be rumors that society are acting on or even insider information.
Just because you don't hear the communication it doesn't miserable here isn't any communication. The mutual fund manager are moving hundreds of millions of dollars a daytime, and they hear alot of article that you don't. So don't be suprised that the bazaar is swinging adjectives over the place, purely assume to yourself, what would Benjamin Graham do?
Without getting into the mechanics of souk making, imagine of it this passageway: For every mart, a buyer is needed. If nobody wishes to buy, the price inevitably have to tip out, even if for with the sole purpose one Dutch auction transaction, to a price where on earth someone is inclined to buy.
It's really simply supply and emergency. If in attendance is seriously of supply -- potential seller -- but no constraint -- potential buyers -- what have to come to pass? The price have to tumble. Volume can intensify price moves -- madness selling, for example -- but it doesn't control the price by itself.
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Answers:
Low volume stocks are more susceptible to manipulation.
Quite regularly you trade against an MM who can sense any deviant amusement right away and manipulate the bid/ask as expected.
Let's voice you want to vend 500 shares of a daintily traded stock. The bid is for 100 shares, so is the ask, the spread is 25 cents. Chances are, the MM is on both sides. You put surrounded by an proclaim to trade 500 at the souk. The MM know within are no buyers around except for a few low bids at the curb. He fill the first 100 at the open market and drops the price to flood those ceiling buys. The stock take a dive and comes stern. Then a buyer comes contained by next to a 500 share buy. The process repeats within reverse. There are constrict sell above that get hold of chock-full, after which the stock returns to the ingenious bid.
No communication? You stingy no report the public know give or take a few. There could be rumors that society are acting on or even insider information.
Just because you don't hear the communication it doesn't miserable here isn't any communication. The mutual fund manager are moving hundreds of millions of dollars a daytime, and they hear alot of article that you don't. So don't be suprised that the bazaar is swinging adjectives over the place, purely assume to yourself, what would Benjamin Graham do?
Without getting into the mechanics of souk making, imagine of it this passageway: For every mart, a buyer is needed. If nobody wishes to buy, the price inevitably have to tip out, even if for with the sole purpose one Dutch auction transaction, to a price where on earth someone is inclined to buy.
It's really simply supply and emergency. If in attendance is seriously of supply -- potential seller -- but no constraint -- potential buyers -- what have to come to pass? The price have to tumble. Volume can intensify price moves -- madness selling, for example -- but it doesn't control the price by itself.