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Market Impact of limit and stop orders untill executed.

Member Since Apr 13, 2018  10 posts saurabhsuman003 (saurabhsuman003) Jul 15 at 13:15
Suppose I am in a buy trade of lot 0.1 entered at 3, currently at 4 and my target is at 5.
If I put huge sell limit order of around 10 lots at 5 or 6 or around 5 will it have an impact of driving the market up.
Or for that logic If I put huge buy stop order of around 10 lots at 5 or 6 or around 5 will it have an impact of driving the market up.
Or atleast even a slight impact.

I think so because the market is designed to fulfill maximum orders in possibility range. Like SL if not low enough, will be instantly hit. Same goes for TP.

This was just a wildcard guess. Pls help experienced traders.


Member Since Aug 20, 2009  256 posts kennyhubbard (compuforexpamm) Jul 15 at 17:55 (edited Jul 15 at 17:56 )
Unfortunately not. Great question though.

Price only changes when a transaction occurs. So an offer means nothing unless it is accepted. You may have a car that you value highly but you won't know the true value until someone hands you cash for it and the value then becomes that price that you exchanged at, not what you had in your mind, or advertised.

Now clusters of orders(stop or limit) will affect behaviour of price action when triggered. Stop orders(normal stop orders & stoplosses) will trigger a run of pricing as they are often clustered together(fibonacci, last bar high.low, etc). That is why you should think of stop orders as breakout orders. Often this price behaviour is thought to be stop-hunting but it is actually normal market behaviour.

Limit orders on the other hand tend to create resistance when they are clustered together. They are often clustered together for similar reasons to the stop-orders.

But to emphasize, until they are triggered they cannot affect the price.

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