Source
r/PersonalFinanceCanada•
FUNTR6

Does a sell order apply downward pressure?

Assume I own some stocks and want to sell above the current trading price. I can enter a sell order with my asking price and an expiry date in the future. If the stock hits that price the trade will execute, otherwise not.

I'm wondering if having this open "sell" order on the books exert any downward pressure on the stock price? Can traders see that someone is trying to sell and does this tend to drive the price down? I know the real impact would be unmeasurably small for a single order, but perhaps consider the case where thousands of people choose to open sell orders with high prices and long expiry dates (for the same ticker symbol).

Just wondering if I should open a sell order with a long expiry or wait for the price to rebound and then sell. Thoughts? Flames?

Posted Oct 2, 2019, 12:27 PM UTC

54
xenocidic•

A bunch of sell orders would just be considered the resistance level.

https://en.wikipedia.org/wiki/Support_and_resistance

2
FelixYYZ•

I'm wondering if having this open "sell" order on the books exert any downward pressure on the stock price?

If you are selling a blue chip type stock (big copany), unless you are selling millions of dollars, it won't do anything to move the stock one way or another.

I should open a sell order with a long expiry or wait for the price to rebound and then sell. Thoughts?

So you want to sell stock which is currently priced at $50, in the future for $100.....what happens if at $90 they release new that pumps the stock to $150 and you sold at $100? You're going to feel like Melvin.

1
aughhhhh•

Yes, everyone with Level II access can see your order and your brokerage. It gets ranked with any others trying to sell at same limit price.
Your idea is just fine when you want to set the price, and walk away, believing that market volatility will eventually get you your price.
The downside is obviously that your price may never be reached, you go unfilled and the market moves further against you.
Sometimes a limit order sitting in line will become 'the price to beat' and everyone diven to get the deal done, will continually fill the slot a penny closer than you. But these are usually orders for only 100 shares, so they are frequently breached.

1
awesome_guy99•

Depends on how many shares you're selling. If you're selling 2000 shares on a $50 stock then it's probably not going to make a difference.

Can traders see that someone is trying to sell and does this tend to drive the price down?

Most trades of active stocks are done by computer programs with preset triggers based on a number of variables. Professional traders aren't generally sitting around looking at a computer screen watching the prices in real-time and then clicking a button when the price hits a certain target.

but perhaps consider the case where thousands of people choose to open sell orders with high prices and long expiry dates (for the same ticker symbol).

Yes of course. If more people want to sell a stock than buy it, it's going to go down in price.

1