Post by oldman on Oct 19, 2013 8:04:33 GMT 7
As a small investor, when you want to buy, you will simply buy from the sell queue or queue up to buy from the buy queue.
However, as a bigger investor, you may have to trade differently. Firstly, you need to collect a lot more stocks and usually, you cannot simply buy from the market as this will likely drive up the share price and it will cost you more as the days go by.
So, instead, as a bigger investor, if one wants to buy, it may be better to put substantial sell queues and encourage the sellers to then sell into your buy queues. If your sell queues are taken, this is also OK as you would have made the difference between the buy and sell queues. Of course, this is not your preferred option but a profit is still a profit.
This appreciation of the market dynamics is important for the small investor as he will then learn not to read too much into any trading data patterns. Specifically, if there is a large sell queue, this does not naturally mean that there is a large seller.
Also remember that the large investor can also play the game of reverse psychology and may instead put up a large sell queue when he actually wants to sell. Hence, only he and he alone knows of his intentions.
Moral of the story is that one should not read too much into any trading data as frankly, only the large investor knows whether he truly wants to buy or sell.
However, as a bigger investor, you may have to trade differently. Firstly, you need to collect a lot more stocks and usually, you cannot simply buy from the market as this will likely drive up the share price and it will cost you more as the days go by.
So, instead, as a bigger investor, if one wants to buy, it may be better to put substantial sell queues and encourage the sellers to then sell into your buy queues. If your sell queues are taken, this is also OK as you would have made the difference between the buy and sell queues. Of course, this is not your preferred option but a profit is still a profit.
This appreciation of the market dynamics is important for the small investor as he will then learn not to read too much into any trading data patterns. Specifically, if there is a large sell queue, this does not naturally mean that there is a large seller.
Also remember that the large investor can also play the game of reverse psychology and may instead put up a large sell queue when he actually wants to sell. Hence, only he and he alone knows of his intentions.
Moral of the story is that one should not read too much into any trading data as frankly, only the large investor knows whether he truly wants to buy or sell.