Dear team - i just get confused sometime as to why the price of few stocks keep rising even when total qty offered is bigger than total qty bid. bid is less than offer, i guess demand is less, then why the price rise? is this because of the best bid-offer?
1 Like
@hb0727 : you are allowed to disclose only 10% of your total bid /offer . so it is possible that total offers or higher portion of total are disclosed but bids are hidden vice- versa .than there is theory of sentiments /charts that one will buy/sell only if the price touches/crosses a particular price so if there is a big buyer he might be in waiting to buy only at that point etc etc .these can be some of the answers but surely no real relation with market price behavior.
1 Like
Basically price move up or down depends on supply and demand only but that with respect to near current price. Very far placed qty either buy or sell may or may not have any significant indirect influence on price, leave alone any direct influence. If current price is rs 100 and I place an order of buy one crore shares at rs 80.05 why should it drive the price up.
1 Like
thanks, this means most of the orders we see are limit orders? waiting for the price to strike their estimates?
Also i can infer here that market price is decided not on total bid/offer but on qty in demand and supply for trade at that moment? i i correct to say that?
Sir market price is decided by the spread between bid and ask price only. To know this clearly just take polson limited scrip and go to bseindia. U will see that bid is at 13800 and offer at 14200. Bseindia will also show pending buy and sell orders. It will show best five bids and best five ask price also. Now u can place a test buy order and the qty will increase by one.
So wat happens is when spread difference between bid and ask is 400 rupees the stock price will become stable for even hours. The brokerage firms which are authorized market makers will buy and sell at same time and get benefitted by this spread.
Now in polson case stock price will change only if buyer and seller come to a term.
Also u can put unusual fake buy order which bid price will never reach. Such orders will not affect stock price. For eg reliance is trading at 1340. Suppose u put buy order at 1300 it is just a fake order. Sellers will know that and hence their ask price will never match ur 1300 buy bid. This way wat we see is lot of fake buy and fake sell orders which will not affect the demand.
Monday u take polson and test this. U can create a buy order at low price and see for urself in bse site how this bid ask spread difference works.
Lesson: never place market order with scrips like polson which has low volumes. Bcos then ur market order will be executed in highest ask price guy who is in the queue
1 Like