Can we Move the market?

Hello, I was wondering if it would be possible (or legal) if enough of us small traders got together and made the same trade at the same time on a slow day, we could create a little trend. That's how the big boys do it, right?

depends what market ur talking about.. the answer is you would be able to more in equities than currencies... lower float equities are more easily changed with dollar traded... much is the reason for pump and dump .. fraudsters choose a stock with a low float.. that may or maynot have news surrounding it.. he then purchases that company with that setup with low trading activity.. he then waits and begins creating market buzz.. or spamming forums with his Idea of whats gonna happen or a new merger that could be in the works.. if enough people believe his presentation he will have successfully pumped the stock up *cough* *cough* CRAMER *cough* and then after inflating the price he then dumps it... this is illegal apparently excluding cramer ... but works

currencies not so much ud need a whole shi-ton of capital and teams of analysis very smart capital injection you need to control the order flow *cough* *cough* citifx *cough* but it could be done ud need to convince about 500Million for a 1/2 decent move.

500 million? yeah, for a huge move. 5-10 million will move the market a couple of pips. be careful though, if there isn't enough liquidity, you will move the market against you. remember, big banks and brokers make the market. they can name the price that they want to trade at. you have to take the price they give you. they can negotiate for a better price if there isnt enough liquidity. you will get stuck with a worse price.

the reason this happens is because of the "ladder system" at each price, there is a certain amount of liquidity. the farther away from the current price, the less orders there are. when laid out, it looks like a ladder with a bunch of rungs. heres what the ladder would look like for opening a buy:

1.0123 1,500,000
1.0122 1,100,000
1.0121 900,000
1.0120 850,000
1.0119 200,000

and so on. so, if you had placed an order for 5 million, you would fill 1.5 mil at 1.0123, 1.1 mil at 1.0122 etc. this would actually push the price AGAINST you. again, banks are only able to move prices in their direction because they are able to negotiate those prices.

another quick thing to note, most brokers wouldn't be able to provide that much liquidity. only the big guys like CitiFX DBFX, FXCM, GFT etc. could provide enough liquidity to fill those huge orders.

What ive heard are usualy big banks and huge liquidity funds that can move the market... i doubt any of us traders are single handedly doing anything

A waste of time for retail traders.... you'd be better to spend your time studying the methods and behaviour of professional and instituational traders, and trying to jump onto their runs in the market rather than making your own!

Most markets are bigger than any individual trader, and indeed bigger than most groups of traders - any retail traders/groups who think they are big enough to have an impact on price (ie "bigger than the market") usually end up getting belted by the market..

Implied in your premise is that most of those on this board are trading in the real market. In fact, most here trade through 3rd parties and the trades never hit the real market. Market makers don't move their prices based on customer flows. They move their prices based on interbank price changes or in other words bank to bank flows. MMs offset their risk (if that is their trading model) or not depending on whether they are pass through entities or bucketing organizations. Price moves generally from bank to bank transactions, where bank is a word describing those organizations that act as prime brokerages and which have interbank dealings in currency. 99% of the people on this list are so far down the food chain that the banks don't see or notice our order flow at all.

Second, let's assume for a moment that we are a bunch of high rolling hedge fund types with hundreds of millions in assets and prime brokerage arrangements with tier 1 banks and we all decide to pick a time to execute our little plan. If executed incorrectly, it would backfire and would lead to a loss for most of the group. Chances are good that there would be frontrunning within the group. I know I would frontrun if I knew orders were going to flow at a given time. This provides a disincentive to collude. I know there is a way for a big organization to do it, but execution and secrecy are key. A new price level has to be established during low liquidity and price has to be pushed far enough and held there long enough so that profits can be taken. This type of maneuver is done on occasion in the markets by the big players. Think pre-holiday or time of very low liquidity like move prices on the Sunday session, hold a price level into the U.S. Monday session and distribute.

I wanted to post a link to the pdf article but can't recall exactly the details (if anyone knows the article, please post a link). I believe it was a Stanford (could be elsewhere) University competition where market making bots were set up by the students and competed against each other in a simulated market environment. The winning bot (created by the professors) had an interesting strategy: very rapidly bid price up - way beyond current value and then hold prices at the new higher level for a time. Then once the other bots had adjusted to the new price level and liquidity had increased, distribute to the other bots little by little to take the massive profit. You see this type of operation attempted in various markets a few times a year - sometimes successfully and other times it fails miserably.