[Lix]

Hello,

I’m not clear on this. Let’s start with a basic example.

Let’s say I want to buy 100 cases of beer. So I go to the grocery store but there are only 5 cases in the fridge. The grocery store only puts out 5 cases each day so I have to come back every day and buy the 5 cases each time until I have 100 cases. However, there are 200 cases in the back storage in the grocery store. So why can’t someone just go to the storage and bring me 100 cases out of the 200 available?

Similarly, if a stock has, say, 10M float and I want to buy 100,000 shares, I won’t get filled if the current volume is too low. Yes, but there are 10M outstanding shares available for purchase/trading. So then why can’t they sell me 100K out of the 10M?

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[Steve]

I like your analogy and it’s a good question. It’s a bit of a misconception that outstanding shares can be bought at any time. Unlike the store selling your cases of beer (Cruzcrampo I hope), the stock market is largely decentralized, meaning the shares are held by various individuals and if they don’t want to part with their shares at the suggested price, then you won’t get filled. That’s why us traders often have to buy up shares slowly when sellers appear and are happy with the price. It’s really a matching service between buyers and sellers.

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