Stock Trading Market Order and Online Broker platform issue

Discussion in 'Order Execution' started by linker2k, Feb 2, 2017.

  1. linker2k

    linker2k

    Say for example a stock is at $55.53 during the trading day, and a trader wants to purchase 2000 shares of that stock close to that price, and that stock is gradually rising within that time frame during that day. The trader puts in a buy market order to purchase that stock as it is gradually rising when from when last trading @ 55.53. Since that stock is gradually rising in price, and because, let's say for example, 2000 shares aren't being sold together by a seller, but instead the sellers are being made available at: 500 shares @ 55.54, 500 shares @ 55.55, 400 shares @ 55.56, 100 shares @ 55.57, 200 shares @ 55.58, 200 shares @ 55.59, 25 shares @ 55.57, 25 shares @ 55.59, 20 shares @ 60.00, 20 shares @ 60.01, 5 shares @ 60.02, 5 shares @ 60.01, and the trader makes the market order and the brokerage platform purchases 2000 shares in such sequence of prices because the stock wasn't being sold in 2000 shares all at once. I have the following concerns:

    1a) With a usual online brokerage platform for stock trading, will the purchase of the 2000 shares show up on the screen as one single purchase even though the shares were bought at different prices or will it show on the screen as 12 separate purchases to deal with in case the trader wants to sell them?

    1b) Say for example, that stock is trading @ 65.04 in exactly one month since that trader bought those 2000 shares, and he wants to sell all 2000 shares in that same day, close to the current price of 65.04 in a particular time frame of that trading day, the way a usual online brokerage platform works, can the trader sell those 2000 shares bought at various prices as one singular unit or will he have to sell each of the 12 sets of shares separately during that time frame of sale of that day and each of those sets could potentially be sold into further sets of various prices if the stock price is decreasing or increasing during the moment of sale of each set?

    Thank you.
     
  2. You can do whatever you want with the shares you own, so yes, selling them all with one order is an option.

    Also, don't use market orders unless you know what you are doing.
     
    lawrence-lugar likes this.
  3. xandman

    xandman

    1a) Your trades will probably be grouped on your dashboard as one stock ticker based on average price and/or current market price. You will have access to an order log to recall your original purchase prices.

    2b) Yes. You can trade in one go. However, it may not be prudent if you are trading a thin market. Say, 100 shares bid and 100 shares ask. As soon as you come into the market with 2000 shares, you may find the market bid/ask retreat from mid point to see if you are a big trader looking to flood the market and possibly hurting you chance of getting the most favorable price. Remember, it's an auction.

    Regarding "sets" (let us call them lots), you can sell 2000 lots of 1 share at a time if you wanted. But, the per ticket commission charge may be astronomical.
     
  4. linker2k

    linker2k

    xandman, forgive me for the questions, any trading vets taking pleasure to help please do:

    regarding this thread, you said 'as soon as you come into the market with 2000 shares', do you mean when being in the market after a submitted purchase request order for purchase of the 2000 shares, or when putting the 2000 shares for sale?

    Also, you mentioned about the possibility of hurting the chance of getting the most favorable price, how many cents from the desired price range would be considered unfavorable if the trader sends in the market order submission? Say the trader sends in the buy order for 55.53 with 2000 shares, what would be considered an unfavorable price usually, also taking into consideration the various lots? I'm not talking about a doom scenario, that's obvious, I'm talking about an average non doom unfavorable reaction.

    what does 'flood the market' mean in that context?
     
    Last edited: Feb 3, 2017
  5. linker2k

    linker2k

    anyone understand maybe what xandman's answer in case doesn't reply and do you agree or disagree? (check my post question above this one)
     
    Last edited: Feb 3, 2017
  6. tommcginnis

    tommcginnis

    Whoa! Dude!
    Do yourself a favor and pursue a paper account ASAP, and do not put ANY live dollars on the line until you "totally get" xandman's reply.

    Keep reading, keep asking, but find a paper outlet before you lose bucks.
     
    vanzandt likes this.
  7. linker2k

    linker2k

    true, but an online broker platform is the real thing, it's from those who have experience with those platforms that I am seeking answers from.
    tommcginnis if you feel like answering those questions I made to xandman, please do. (if you have online broker experience of course).

    I could so picture someone say to me someday: "do your own homework" lol
     
    Last edited: Feb 3, 2017
  8. xandman

    xandman

    Sorry for the metaphors.

    They key concept here is that you are in an auction market. So, let's say you come into the market with a bid for 2000 shares and the bid/ask is 100 shares bid and offered on each side. You have just shown yourself as a motivated buyer who is able to lift the current offer.

    Your choice is to keep your limit order and standfast until somebody hits your bid at your price. But, then who is the aggressor in this case? It is you. Basic supply and demand. Your relatively large demand causes the demand/supply curve to go up thus resulting in a higher equilibrium price.

    So, do you wait with your bid while everybody dangles higher offers in your face and risk an unfilled order (have the market get away from you) or do you chase the offers higher? Vice versa for selling 2000 shares.

    Unlike shopping at a store, there are no quantity discounts. Oops. Is that a metaphor?
     
    Last edited: Feb 3, 2017
    murray t turtle likes this.
  9. linker2k

    linker2k



    Thank you. But I have an other inquiry from one your previous answers, and here it is again:

    "Say the trader sends in the buy order for 55.53 with 2000 shares, what would be considered an unfavorable price usually, also taking into consideration the various lots (I think sets sounds cooler)? I'm not talking about a doom scenario, that's obvious, I'm talking about an average non doom unfavorable reaction."

    I'm interested in knowing an example of an average moving stock unfavorable price execution in that situation, that is not too low

    Last edited: 3 minutes ago
     
  10. tommcginnis

    tommcginnis

    Don't re-ask your question -- do your homework, first.
    Tell what you learned; *then* ask.
     
    #10     Feb 7, 2017