Perfect example, I do like it, so here comes a question I asked before without getting any clear answer: couldn't this be used to try start a trend? Could I agree to buy or sell with a buddy on the other side at a higher or lower price and go on for sometime at this game to try induce others to jump in and fuel the trend in the direction I want? nt
Two part answer... A. Unless you can sling around a huge amount of orders in any market that would cause sentiment to change, then no. You'd need billions of dollars to "start a trend" I would figure, and even then, I just don't see it happening. B. Bad juju. Colluding in the markets is the same as market manipulation. The CME frowns on that sort of thing, and I am damned sure the SEC would throw you into the lion's den if they caught you doing that with stocks.
Well, I apparently missed the one hour edit deadline for my response. Here's the ladder I wanted to plug into that post...
I do not know how to respond to your question in the manner that you ask. Buyers enter orders. Seller enter orders. When they agree on a price, there is a trade. When offers at one price get filled, and there are buyers willing to raise the bid to match the new best offer, there is another trade and prices move up. Same on the way down. Seller fills the bids and become the offer. If sellers get more aggressive and lower they limits, there is a trade at lower prices and the security goes down in price. Really very simple.