3 ms·
If I can use methods like 2 or 3 to make huge orders without moving the market, why bother shorting? Couldn't I use this to make easy profits on longs? Say "X
by rspeele 4y ago
If I can use methods like 2 or 3 to make huge orders without moving the market, why bother shorting?
Couldn't I use this to make easy profits on longs?
Say "X" is the method to place orders that don't affect the price.
1. Buy 5 million shares via X, at the current low price
2. Buy 5 million more shares via my stock broker, pumping the public price
3. Sell all 10 million shares via X, all at the new high price
My guess would be that the organizations you deal with through these dark pools or whatever discount your trades based on the perceived advantage you're getting by not making them public. If the public price is $100, and you want to sell a jillion shares through a dark pool, nobody is going to offer you better than, say, $98 per share or whatever their quants have calculated as a fair price for a sell that big. Likewise if you wanted to buy a jillion they'd ask for $102 or so.
There can't be a free lunch here.