Care to explain how supply and demand of stocks (through stock buying for long position, or selling from long position and short sales) lead to moving of stock prices up/down? So a stock is worth exactly what the price is trading at at any given moment mark-to-market. Basically every stock has a bunch of bids and ask limit order in the order book. This is the liquidity in the market. Stocks are continuously traded and positions continuously mark to market correct? To move prices up or down will involve someone wiping out all the bids or asks that are currently in the order book by taking away the liquidity (filling those orders). Or alternatively, those who put in the limit orders in the order book will have to change their limit prices on their own free will based on a change of their opinion on the worth of the stock. So this is how the market is arrived. So the most ideal market is one with extremely high liquidity so that no single entity can "wipe out the bid ask stack" by filling all those orders and then move to quote for a significantly different price shortly thereafter? E.g. a short seller can't hit all the bids $10, and then the order book is blank and then go on to quote at $2 to scare everyone off as if the stock is now worth $2, what was just worth $10. But if someone could do that, say have enough money to wipe clean the limit order book to significantly move a market, and then requote lower, could they effectively "reprice" a stock on their own? Because once they've wiped out the limit book and moved it lower, they can flash quotes at a significantly different price, and now the market thinks this is now the new equilibrium for the stock (the new worth of the stock in the market's eyes so they think) and everyone else starts quoting bids/asks around this new price thereby causing trading to be significantly changed/repriced on a permanent basis?
If somebody "wipes out" all the orders in the order book, then that trader will likely hold a [substantial?] position in the instrument. So, unless their is some other reason to act seemingly irrationally/suicidally, that trader will want to quote prices (i.e. place target orders) that make the net position profitable. And other traders will either be long, short or flat as a result of the order book being "wiped out". They too will want to quote prices (i.e. place target orders) that make their net positions profitable. So, in the end, quotes return to the market, and a new continuous auction continues as before...
Well depends. If there is not a lot of liquidity in the market at the time, then it might not take much capital to wipe out the order book limit orders and then reprice it lower and start affecting market sentiment. My point is that, can't manipulators basically affect sentiment and reprice instruments all on their own? The idea that they can't is if the market is very liquid. There are lots of money involved and the manipulator has not enough buying power to keep manipulating. For example, if something fell to such a low price that its such a bargain, the 'theory' is people will keep buying hand over fist until that low price cannot be supported anymore. But if a manipulator can wipe out the order book, and then put up new quotes soon after at a much different price, then people start thinking this is now the new 'worth' of the instrument and other traders then re-enter the market to provide new liquidity, but this time quoting around the new, much different price. Basically thats how they are slamming all the commodities right? There could be a bunch of bid/ask limits at say $100. Then some manipulator comes in and wants to take it lower, so they fill all the bids until its empty down to $95. And then soon after they requote the instrument at $30. Now everyone thinks this instrument is worth $30, and new limit orders from market participants start quoting around $30 and the instrument starts trading at $30 for a long time because of this, since nobody else has the capacity to take it back up by hitting on the asks to reprice it higher.
You could wipe out half the order book. That would impact price. It would however have no bearing on value. If the individual stock moved up but all correlated/inverse correlated instruments didn't agree, you probably just created an arb opportunity for someone...
Liquidity is not just the order book. When the price is advantageous, liquidity off the order book will come into play. Not everyone shows their hand by having their interest clearly visible in the order book. Manipulation without the co-operation of other large players is futile.
If they believe the Stock is no longer worth $20 they will pull there orders at the BID to buy, and if there only prepared to pay $5 then the stock will drop to $5, this generally happens in pre market trading after news, sometimes in after market.