Volume and SP movement, page-14

"My question is more on whether they deliberately manipulate the market by artificially injecting buy orders to make it appear there is a lot of demand for the shares. Anyone come across things like this or it's just me overthinking?"

@roti.hunter,

I seldom respond to these sorts of observations/questions but I sense you seek a true understanding (as opposed to many who - when share prices don't go their way - launch conspiracy theories based on what they see in their screens).

In summary, you should forget what you see lining up on the buy or sell side at any given point in time. It's a complete waste of time, for the following reasons:

1. Your Buy/Sell depth screen does not reflect all the buying and selling intentions of all market participants at any given point in time.

2. A large number of orders sitting with major brokers are not shown on the screen at any point in time; instead they are handled by computer-driven algorithms which put volumes into the screen at random times

3. Even if you do think you your depth screen gives you a feel for the relative supply vs demand for a stock (which it won't, but let's assume for the sake of argument), within a short period of time it has all changed anyway.

4. No matter what some may say, manipulating share prices is incredibly difficult to do these days, with significant regulatory oversight and surveillance. Not just external surveillance from the ASX and ASIC, but even within financial institutions where all kinds of independent checks and balances occur all the time.

5. The best thing any investor can do is focus time and energy on analysing businesses, the actions of their managers and the industries in which they operate. Because share prices ultimately follow company performance and to worry about what might be driving short-term share price action is a fool's errand.


Unfortunately, 99% of what is posted on this forum is focused not on long-term company performance, but on speculating about short-term twitches in share price.

But there are a number of diligent and smart investors on this forum who do focus on long-term shareholder value creation (or destruction, as the case often is), so my advice to you is to seek out those sorts of posters and allow your opinions to be informed by theirs.

But forget about trying to second-guess who might be buying or selling at any given moment, or why they might be doing what they are doing, because its merely "noise".

Here endeth the sermonising.

..