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Say a stock is selling at about $50.00 and I have say, 1,000 shares.

Now pretend I want to tank the price, in your experience, can selloffs be triggered by say, selling the 1,000 shares at say, $5.00 each and eating the loss.

The theory behind this would be computer programs looks for buy/hold/sell signals and seeing some high signals that say "sell".

What if I sell the 1,000 shares in say, 8-12 share increments spaced about 20 seconds apart at +/- 20% of the $5 to make it look like a new normal?

  • 1
    Have you ever looked at trading volumes for whatever security you're thinking about? Many (most) securities trade millions and millions of shares each day, 1000 shares won't make a dent. – quid Sep 30 '16 at 21:08
  • I'm pretty sure this is a duplicate... – keshlam Sep 30 '16 at 21:57
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    I would be careful with this kind of a strategy, as if you attempt to profit from things like this regulator would likely view it as market manipulation and it could land you in jail. – SMeznaric Oct 1 '16 at 13:38
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Assuming you are executing your order on a registered exchange by a registered broker, your order will be filled at the best bid price available. This is because brokers are legally obliged to get the best price available.

For example, if the market is showing a bid of 49.99 and an offer of 50.01 and you submit an order to offer 1000 shares at 5.00, your order will be filled at 49.99. This is assuming the existing bids are for enough shares to fill all of the 1000 shares being offered. If the share you are offering lacks the necessary liquidity to fill the order - i.e., the 49.99 bid is for less than 1000 shares and the "level two" bids are not enough to fill the remaining shares, then the order would be posted in the market as an offer to sell the balance (1000 - shares filled at 49.99 and those filled at level two bids) at 5.00.

I'm pretty sure that the scenario you are describing would be described as market manipulation and it would be against the law.

2

That amount of shares is too low to create "ripples" in the market.

Usually you don't specify the price to sell the stock, unless you are personally on the floor trading the securities.

And even then, with a volume of $50,000 it would just mean you threw away $45,000.

For most people it would mean setting a $5 sell order, and the broker would understand that as "sell this security so long the price is above $5".

When you get to the trading volume required to influence the price, usually you are also bound by some regulations banning some moves.

One of them is the Pump and Dump, and even if you are suggesting the opposite, it might be in preparation of this scam.

Also, the software used for High Frequency Trading (what all the cool kids[a] in Wall Street are using these days) employ advanced (and proprietary) heuristics to analyze the market and make thousands of trades in a short interval of time.

On HTF's speed:

Decisions happen in milliseconds, and this could result in big market moves without reason.

So a human trader attempting to manipulate the market versus these HTF setups, would be like a kid in a tricile attempting to outrun the Flash (DC comics).


[a] Cool Kid: not really kids, more like suited up sharks. Money-eating sharks.

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