I'm trying to figure out how much the price of a stock will change if a particular amount of shares are sold at that time.

"X stock" is at $100 per share. If I sell 1 share how much will that affect the $100 price?

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    If it is a liquid stock you will not change the price at all by selling 1 share. – Victor Jan 28 '17 at 5:11

The price of a share has two components:

Bid: The highest price that someone who wants to buy shares is willing to pay for them.

Ask: The lowest price that someone who has a share is willing to sell it for.

The ask is always higher than the bid, since if they were equal the buyer and seller would have a deal, make a transaction, and that repeats until they are not equal. For stock with high volume, there is usually a very small difference between the bid and ask, but a stock with lower volume could have a major difference.

When you say that the share price is $100, that could mean different things. You could be talking about the price that the shares sold for in the most recent transaction (and that might not even be between the current bid and ask), or you could be talking about any of the bid, the ask, or some value in between them. If you have shares that you are interested in selling, then the bid is what you could immediately sell a share for.

If you sell a share for $100, that means someone was willing to pay you $100 for it. If after buying it, they still want to buy more for $100 each, or someone else does, then the bid is still $100, and you haven't changed the price.

If no one else is willing to pay more than $90 for a share, then the price would drop to $90 next time a transaction takes place and thats what you would be able to immediately sell the next share for.

  • Does that mean that two seperate people selling off 2 different amounts of shares at the same price have the same effect ??? Quantity doesn't matter ? – theloosegoos Jan 28 '17 at 4:17
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    @theloosegoos Quantity does matter. If someone wanted to sell 1,000,000 shares of "stock X" for $100 then they would have to find enough people willing to buy that stock for $100. If there were only 100,000 people who wanted to but stock X for $100, then that person would have to reduce the price to sell all the stock. – Nosrac Jan 28 '17 at 4:43
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    +1 for your explanation of why the bid and ask prices are always different. – Nosrac Jan 28 '17 at 4:44
  • @theloosegoos What Daniel said. Quantity matters. If there are three people A,B, and C who each want to buy 1000 shares and A is willing to pay $80 per share, B is willing to pay $90 and C is willing to pay $100. If you decide to sell 1000 shares or less, at market price, then you will sell them all to C for $100 each. If you decide to sell 3000 shares, you will only be able to sell 1000 to C, so the next 1000 will be sold to B for $90 each, and the next 1000 will be sold to A for $80 for each. – Paul Jan 28 '17 at 4:54

Unless other people believe you have a reason for selling at a lower price, your sale probably has no lasting effect at all on the market. Of course, if people see you dump a few million dollars' worth of shares at a discount, they may be inclined to believe you have a reason. But if you just sell a few, they will conclude the reason is just that you needed cash in a hurry.

  • I recently came across a person that said " if you sell say one whole bitcoin that will move price around 10 cents. I was curious to if this was true for one and second. How would you know that – theloosegoos Jan 28 '17 at 13:29
  • Bitcoins are a different question, which I won't touch... But I have no idea what that statement might be based on. – keshlam Jan 28 '17 at 14:03
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    @theloosegoos That might be true at some particular exchange with very high spreads and very poor liquidity. But right now, just on Bitstamp alone you'd have to sell 18 bitcoins to move the price 10 cents, and it would likely just snap right back. – David Schwartz Jan 29 '17 at 1:45
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    @theloosegoos They are dynamic, that's correct. As an example with bitcoin, take a look at this exchange's order book. You'll see buy orders and sell orders. The top buy order is the current bid, the top sell order (lowest price) is the current ask). If you have 1 bitcoin to sell, and the top buy order is for more than 1 bitcoin, you won't affect the price at all. If you have 100 bitcoins to sell, you would work your way through that whole buy order list, selling to buyers who aren't willing to pay quite as much as the first buyer. – Paul Jan 30 '17 at 17:38
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    @theloosegoos It's not a calculation. It's just the number of bitcoins that currently have buyers waiting to buy them above that price. – Paul Jan 31 '17 at 2:31

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