http://www.investopedia.com/terms/l/liqu...
The liquidity of a stock can be judged by the daily trading volume, the current bid-ask spread and by the depth of the market.
If you see a stock that is trading under 100,000 shares per day, be careful - that's a thin market. Using a market order in thin markets is financial suicide. Neither should an illiquid stock be used for short-term trades; slippage is a killer. Likewise, if your 1.36 penny stock has a bid-ask spread of 10 cents, you're asking for a 20% hit to enter the position (10 cents in and 10 cents out). Steer clear. Move on to penny-wide markets.
Penny stocks are a special case, or should we say an extreme case of illiquidity and extremely high risk. Often, when price starts down, there are no buyers. And you better be watching it every second, because you can't use stops with illiquid stocks. (stops become market orders when executed). Pennies are mostly a Pump & Dump scam; horrible stocks for beginners. Forget those for now. Learn something first. Invest in good companies with good liquidity. It is a traders first rule of trade: no liquidity, no trade (unless you plan on holding it for several years).
Even a stock that trades 4 million shares a day like IBM, the bluest of blue chips, can become illiquid at the open, or at an earnings report, or at the moment of breakout of war, or at the Non-Farm Payrolls release, etc. If everyone is on one side, then the other side becomes illiquid. Put a market order in at the open and it can trade at ANY price. But during normal markets and normal trading, IBM is always liquid, and you will fill near the last trade, even if you trade 10,000 shares. In essence, an individual cannot effect the price of a stock significantly with a small trade in a liquid stock when the markets are liquid. Otherwise, use a limit order instead of a market order.
http://www.investopedia.com/terms/l/limi...
It depends on the stock and its liquidity. Unlikely that 1500 dollars (or pounds) will have any effect.
If one person is selling/buying it may mean there are lots of other people the same way, so this overhang will have an affect.
Markets and their behaviour are never that simple: there are lots of different arguments affecting the price at the same time.
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As said above if you want to make money with penny stocks you have to follow some proven methods. This one in my opinion is the best: http://pennystocks.toptips.org
Bye Bye
Buying large qty. of shares having less demand will not bear any effect on the share price.
large qty
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Lets say I buy 1000 shares of a low priced stock, lets say 1.36. Would my order of 1000 have any effect on this price? Or does it require a MUCH LARGER order or more quantity of orders.
Why? & How so?
