LogFAQs > #950457028

Moonroof this is a omega huge lesson you need to learn here. Most stocks have millions or billions of stocks outstanding and can have hundreds of thousands or millions of shares changing hands every day. With all of that volume, the trades that we make here are just a drop in a bucket and have really no impact on prices

But if you go into a stock with very little volume and waive your big dick around, you will have a drastic impact. If people are only selling 1-2k shares at a time for 70 cents and you come in an place a market order of 36k shares, you'll immediately buy those 70 cents shares, and then some more shares listed at 73 cents, then some at 80 cents, then some at 90, then some at $1, then some at $2 because people have set limit prices at some arbitrary place up, and your market order will just keep searching for the next available price until it fills 36k shares. The volume just doesn't exist to fulfil your order so it will keep going up.

This should sound familiar - because it's what we were trying to force the hedge funds to do with GME in the short squeeze. Your broker just saved you from learning this the very hard way.

Warrants in particular are very low volume, because they are issued by the company intentionally as potentially extra shares that could be exercised and added to their existing pool of shares.

So whenever you are placing a big order you should default to limit unless you are very sure the volume is there to handle it. By default you should probably assume that it isn't and rely on limit orders.

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The batman villians all seem to be one big joke that batman refuses to laugh at - SantaRPG