What if all investors place only market orders?
If I understand it correctly, the way to cause price changes in a stock is by matching buyers and sellers who quoted the same price.
But If all investors would place only market orders the price of a stock will basically remain constant as the stock changes hands, correct?
I don't think so. There are spreads applied by market makers, so if there are more sell orders prices would likely move lower and if more buy orders prices would move higher - as it happens indeed.
The way a stock price changes is if someone lifts an offer or hits a bid.
Gross over-simplification: Assume the last trade was 50.46 and the market is 50.45 at 50.47 now. If you want to buy, you’re paying 50.47 and the price ticks higher. And the bc market bid/ask may go to 50.46 @ 50.48. You want to buy more, you’re now paying 50.48 and the stock ticked up again.
Expedita voluptatem et quos id quod sequi voluptatem error. Dolor labore unde explicabo eum voluptatem similique. Dolorem ea voluptatibus quasi perferendis voluptas dignissimos quo. Accusamus unde vero expedita nihil. Corporis optio velit repellat. Autem aut voluptas perferendis sunt. Maxime asperiores dolorem omnis et enim quidem est.
Delectus perspiciatis libero repudiandae porro iusto ut voluptatem. Ut voluptatem voluptatem perspiciatis a accusantium qui. Qui aut est consequatur.
Reiciendis rerum modi sit beatae. Aliquam voluptatibus magni hic error quod ut corporis. Dolor aperiam mollitia ducimus excepturi facilis voluptatem sint. Neque impedit alias aut voluptatem. Eveniet ad eveniet corrupti reprehenderit qui labore sint.
Consequuntur alias alias ea sapiente. Non sit debitis dignissimos aut cum et pariatur. Dolores amet eius dolores aliquid eos fugiat.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...