0
$\begingroup$

Consider this hypothetical situation:

Let's say that microsoft stock is currently being traded for 200 dollars and via my broker I place a buy order of one stock for 1000 dollars. I imagine there is always a seller for this price, so the stock price chart shows a very brief peak of 1000 dollars and then stabilizes again to around 200 dollars? I am pretty sure that this scenario isn't possible since you never see this in reality, but what is the missing step in my hypothetical situation that prevends this kind of behaviour from happening. Is it just illigal, or do you need to offer a buy order with way higher volume. Why do these transactions don't show up in for example a google stock chart of microsoft.

Improve this question
$\endgroup$
1
  • 3
    $\begingroup$ Your broker will tell you the current price. If you say you are willing to pay 1000 it is just filled at whatever price the market trades for. Flipping the coin, you also don't say I want to sell for 100 and because you were the lucky guy on the other end you get 1000 from whoever "bought" at 1000. $\endgroup$
    – Alex
    Commented Aug 14, 2022 at 17:03

1 Answer 1

Reset to default
1
$\begingroup$

You will pay a maximum of \$1000, but most likely much less, if the current price (the price of the last trade) was \$200, and there is a potential seller on the market waiting for a buyer. In fact, you will pay the best price available, that is, the lowest asking price. So if a seller is waiting to sell and happy to take, say, \$205, then you will pay only that amount, even if you were happy to pay \$1000. In this instance, the price would go from 200 to 205. For more detail see also here.

Improve this answer
$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.