How many lots of total volume one needs to trade for market to start reacting?

Question

When trading penny stocks one can easily experience this effect, you buy a huge volume and it raises the price and everyone else starts buying then you stop and start selling and price plummets (usually losing you money)...

I was thinking about the actual FX market, there should be a certain volume that makes you big enough for the market to start reacting at you (I am guessing it is probably related if not based on total volume traded in that timespan).

EDIT: I understand that the spread is bigger and the volume is smaller for some currencies (EURPLN) than for major pair like (EURUSD) however, what I am asking is what sort of volume one needs to trade so that market would start reacting.

So the example answer I would expect to be: 0.5-1% of the volume traded in that timespan (could be 1 minute or 5 sec or whatever)...

I am indeed assuming that there is such a relationship between total volume and size of the trade, but it only seems logical to me...

What is the volume of total volume traded in that timespan one needs to trade for the market to start reacting?

Answer 1

There's a distribution of orders across the order book of different size at different prices. NBBO is the current best best, best offer. When you make a purchase, it takes out some of the ask volume on the book. If you take out all of that volume, one of two things happens. Either additional selling come in at that ask price (iceberg order) and you continue to get fills at that price or no one does and the ask price shifts up to the next best ask in the book.

For example, if the current ask volume is 100,000 shares and you come in with a 5,000 share order, you get a fill and nothing happens to price. If you come in with a 100,000 share buy and the current ask volume is 5,000 shares and no new sellers appear at that price, the ask price moves up after your 5,000 share fill. If it's a contingent buy order pegged at a higher price, now you start taking out book volume at higher prices.

The liquidity at the moment is what determines how much your order will move the market. And since that liquidity varies, the amount of your buying volume at any moment in time will have varying effect on price. So I don't think that you can predetermine a set amount of volume that will move price. At times of low liquidity, it will be easier to move price. At times of high liquidity, you'll need more buying power. So "in order to get noticed", it depends.

Answer 2

What you are referring to is more like day trading.

Bob Baerkey has an excellent answer.

You can only buy puts. The current price may be $0.12 but not have any puts at that prices. You may ask for 10,000 shares at $0.13 and only get 5,000 filled as there are only that many puts at that price.

As the market moves people that are holding shares may see the price going up and offer puts.

Sellers that want to dump shares because they may think the market is over priced or they just plain need the cash may even offer some puts at under the current price. If those puts are rapidly bought out you can see a market sell off and price drop sharply.

Day trading and value buying are different beasts. For value buy small lots at the bottom (easier said than done). Issue puts at a price you can afford (how much you are willing to lose before getting out). This is were you can see a sell off as many people many have puts at slightly below the 12 month low.

Answer 3

The question makes no sense because it assumes there is an FX market. Besides the market being fractured, there is a difference whether you trade a main (USD/EUR) or a fringe currency (EUR/PLN) with low volume.

For mains - let me formulate it it like this. I am in contact with a trader who buys and sells "lots" of 50 million USD equivalent for a fund. One tick on his mouse, 50 million USD bought or sold. Small banks have 20 billions daily turnover on that pair. Means: this is more like MSFT or APPL than small stocks.