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Old 17th June 2011, 07:30 PM
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Default Fake Orders?



There are times when I've noticed that the number of buyers or sellers increases suddenly, and the price moves a bit and then all of a sudden the buyers or sellers vanish without trading at all.

I think I saw one of these things two days ago in MTNL, when 15000 quantity buyers appeared at around 44.55, then some people placed orders at 44.60, so another 15000 came up at 44.65, and another at 44.75. The figure is not exact, it varied by around 500 shares but the number of buyers was only one or two.

After this, a small trade took place at 44.75 and then all three 15000 buyers just vanished so that earlier while it looked like there were more buyers, now there were more sellers. The important thing is that the volume didn't change at all, expect by about two to three hundred.

So is this only to make it look like there are more buyers so that people will think price will increase and buy more?

Another thing is when people trade with only one share. Suppose there's a buyer at 45.50 with 500 shares, and there are sellers at 45.60. Often only one share is traded at 45.50. Is this to force the buyer to come up?
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Old 17th June 2011, 08:03 PM
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Originally Posted by PrashantS View Post
So is this only to make it look like there are more buyers so that people will think price will increase and buy more?

Another thing is when people trade with only one share. Suppose there's a buyer at 45.50 with 500 shares, and there are sellers at 45.60. Often only one share is traded at 45.50. Is this to force the buyer to come up?
Sometimes such temporary orders are placed to create a temporary panic among buyers/sellers.

Suppose someone wants to sell a stock.

Those who are short in the stock or want to buy it, will panic if a big buy order appears in the order book.

They will move up their buy orders or buy at market price.

The seller will sell his shares in this buyers' panic and then cancel his buy orders.

Sometimes such big orders are placed by bored traders who have nothing else to do. I have done it in the past too. .

The same applied to 1-share trades. Ignore such trades. They mean nothing.
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