Buying/selling

[Jimmy001]

Hey all I've been reading up on things, hoping to get into trading in the new year.. just one theory q:

Obviously every sale needs to be matched with a buyer.. but say the price of shares in a particular company has just started plummeting.. surely there are more sellers than buyers? Is there ever a time when you get stuck with stock because no buyer can be found?

 

[coyotte]

Re: Buying / selling

U will nearly always find a Buyer @ a perceived bargain basement price.
Thats why U have STOPS.


Cheers

 

[dubiousinfo]

Re: Buying / selling

Hey all I've been reading up on things, hoping to get into trading in the new year.. just one theory q:

Obviously every sale needs to be matched with a buyer.. but say the price of shares in a particular company has just started plummeting.. surely there are more sellers than buyers? Is there ever a time when you get stuck with stock because no buyer can be found?

October 1987- lots of spec stocks that you couldn't give away.

 

[theasxgorilla]

Re: Buying / selling

Hey all I've been reading up on things, hoping to get into trading in the new year.. just one theory q:

Obviously every sale needs to be matched with a buyer.. but say the price of shares in a particular company has just started plummeting.. surely there are more sellers than buyers? Is there ever a time when you get stuck with stock because no buyer can be found?

It's theoretically possible. But if the share you intend to trade has reasonable liquidity then its a factor you probably won't have to worry too much about.

"Reasonable liquidity" is a subjective measure and would depend on how big orders you intend to trade and your tolerance of slippage.

 

[Jimmy001]

Re: Buying / selling

Cheers for your help.. hopefully a prospect I won't have to face.

 

[GreatPig]

Re: Buying / selling

If you trade illiquid stocks, with sometimes large gaps in the bids & offers, be very careful about placing at-market orders. You could end up filling the orders at significantly different prices to what you intended (for the worse of course).

Cheers,
GP

 

[rodney]

Look at the Market Depth. On the E-Trade site, (and I presume the other broking sites have it) bring up the company code, and check "market depth" This will give you a snap shot of that particular moment in time. You will see a line of buyers with their differing bids, and you will see a line of sellers with their various asks. The top bidder, and asker are seperated by an amount. The wider that is (just at this moment in time) the "jumpier" the stock will be on that days trade. If the bid and ask is only say 1c apart, then at that moment in time the stock is likely to see a higher number of trades. (The bidders have almost reached the "reserve") Also look at the differential in asks and bids as you go "down the line" If there are big price gaps, then there would be a higher chance of a more dissapointing sale price for your sell order. (at that particular moment in time)

The market volume (daily) is the safest refuge. The less daily volume, the more dangerous. A higher volume per day will mean that there is less likelyhood of finding no buyer for your stock when you think it is heading south.

Cheers
Rod