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I see in my trading system two price quotes for a stock. Buying and Selling. Does the buying price means that it is the lowest price someone is currently attempting to sell their stock? If so, then does the selling price means it is the highest price someone is willing to buy that stock right now?

Is it then possible to drive a stock up or down by buying a large volume and then selling smaller chunks of it (or vise versa)?

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You don't see Buying and Selling. You see Bid and Ask.

Best Bid--Highest Price someone is willing to pay to buy a stock. Best Ask - Lowest price someone is willing to accept to sell a stock.

As for your second question, if you can look up Accumulation/Distribution Algorithm and Iceberg Order, you will get basic idea.

  • How does that work in the case where someone is selling 1000 shares, and someone is looking for 100? Does that averages 10 buyers looking for 100? Is there any kind of algorithm for cases like that? is it done in the Exchange level, or the Agent level? – KingsInnerSoul Feb 11 '14 at 15:09
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    I am sure there are grey areas like with any system, but the regulations are getting tighter and tighter. – Victor123 Feb 11 '14 at 15:33
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    Nopes...the quoted price is the price at which the last trade was settled. So if buyer and seller cannot agree on a price, there is no trade and hence last traded price does not update as frequently. As for Bid and Ask, the MMs compete with each other, so they change frequently. The MM does so to always post the best Bid and Ask, so the trade actually happens, since MM makes money only when a trade happens. Does this make sense? – Victor123 Feb 13 '14 at 15:20
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    Yes, in some twisted way I can see how things function. – KingsInnerSoul Feb 13 '14 at 15:36
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    OptionsHouse allows canceling partial orders, but you will have to pay additional commission fee if you chose to sell the remainder – KingsInnerSoul Feb 13 '14 at 16:52

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