Can the price of the stock rise even when there are still sellers asking for a lower price?

Question

I want to know can the price of the stock rise even when there are still sellers asking for a lower price?

For example, the listed price is $0.05. The asking price is $0.055. There are 10 orders shown for that asking price. Please correct me if I'm wrong, but those 10 orders can be conceived as a line in which first come first serve. The volume of these orders is unknown, but hypothetically the sum total of these ten orders amounts to 100,000 in volume. When the stock price reaches $0.055 the first in line will have their order filled, and so on and so forth (each order is 10,000 in volume). However, 3 orders were not completed. So in this situation, can or does the stock price rise even though these three orders are incomplete? If Yes then could I get to the first in line for a higher price like $0.06?

I'm fairly new to this, but I'm starting to realise the importance of volume. My concern is that there has been a very large volume at a lower price, and through the use of a limit order there is a monopoly on a certain price. Let's say there is one order asking to sell 100,000 at $0.055 with a specified limit order for the next three months. Following the rule of first come first serve, they have taken over that position. No one is going to get their order in until that one order is filled.

Answer 1

Lower prices take precedence over higher prices regardless of when the orders were placed. For orders with the same, the first in line usually wins...

The exception is if the front order is "all or none" and there's not enough demand to satisfy the full order, then another order with a higher price (or a smaller order at the same price) could be use to fill the order.

So no, there's not a way for one large order to "monopolize" the order book. Someone with a lower price or a smaller volume could come in and take precedence.

Answer 2

You have the essence of it correct, for the very specific scenario you paint. Yes, you could "get in line" with a limit order for $0.06 and hope that buyers eventually exhaust all of the $0.055 offers available.

However, there is nothing to stop other sellers from coming along and offering their shares at the same current ask price (or even lower - putting them "ahead of the line" in terms of favorable offers to buyers.)

In addition, we don't know if the existing 100,000 units offered have an expiration date on the order, whether any of them are "fill or kill", and we don't know from the buyer side which orders are "all or cancel". So there are a bunch of variables (examples given here are not exhaustive) that can result in some of the orders not getting filled in the same order they showed up on the order book.

Answer 3

When it comes down to it, it's timing, price match and limit rules.

Who got the order in first, best price then any other limits.

The share will only go up if the market closes and the last trade was higher than the close of the prior day. You can put a trade on to buy at 6 cents so it is best price and will likely immediately fill but the next trade will be less and it will not move the share price up except for the nano second it takes to fill your trade and the next one to happen.

Unless you are willing to spend some serious money (Bloomberg $20k+/month system) or way less expensive, pay in person brokerage rates you won't get parcel level data. You will never know who is in front of you.

Some further thoughts.

It sounds like you are looking to trade i.e. buy/sell as quickly as possible to make money. As opposed to invest where you do some analysis buy a stock and hold it for a year or so (usually getting long term tax benefits).

I have historically done trading of this type using a limit order at 5 cents to buy and limit order to sell at 5.5 cents can make you some small returns (10% - brokerage - tax).

There are a few things that need consideration namely volume, automation and hype.

If you're trading a company where the price is this small there may not be sufficient turnover (volume). There may be some passionate owners holding 80% of the company and not buying or selling. If the 'volume' is in the millions you should consider what that is in dollars? It could take days or weeks to fill the order if the volume is low.

Automated trading is quite advanced and there are a number of funds that work at these price levels buying and selling millions of shares before you even get your order on. looking at daily volume for the last few days might give you the answer if automated trading is happening, you'll see a ton of movement with the price not moving much.

Lastly there is hype. It might be a low level stock now but if it is 'found' buying it at 6 or even more cents might be the buy of the century but it is unlikely. Do some very limited research. How much cash on hand is there? Selling stock to raise money is common and will diminish the value of the shares.