Why does share price go up in spite of tremendous selling pressure? I shorted one share after seeing one share where selling was three times more than buying but it went up.

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    Can you provide the volume numbers that depicts tremendous selling pressure as well as 3x more selling than buying? – Bob Baerker Apr 15 at 11:30
  • "selling was three times more than buying " The number of shares sold is always exactly equal to the number of share bought. Do you mean there were three times as many asks as bids? – Acccumulation Apr 16 at 18:17

The drop you anticipated had already taken place by the time you shorted the stock. Given the extra selling pressure, people were trying to sell at a lower price than they otherwise would have and people were buying at a lower price than they otherwise would have. You shorted the stock after the price had already dropped as a result of this imbalance.

If you think about it, why would this information have a delayed effect on the stock? Everyone knows the same thing you know -- why would they wait and act on delayed information instead of acting immediately on what they already know?

To a first approximation, the following assumptions are mostly true at the instant you placed your short:

  1. All traders had access to all publicly available information about the stock.
  2. You didn't have access to any information about the stock that wasn't public.
  3. The market is reasonably efficient.
  4. The buy/sell spread was fairly tight.
  5. No shares were being traded at that exact same instant.

This means that everyone, with the information you had, agreed that the mid-market price was fair given all the publicly available information. If anyone thought the price was too low, they would be buying and, per 5, they weren't. If anyone thought the price was too high, they would be selling or shorting and, per 5, they weren't.

Therefore, the price at the time you shorted already took into account the selling pressure. Any downward effect that would have on the price necessarily already took place.

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