How easy/hard is it to actually sell a large amount of stocks when then price goes up?

Question

I know this can turn into a complicated answer and there are many factors, but I'm looking for a more of a generic answer. So here is the situation. Lets use a large company like P&G for the example. If I bought 50 shares of stocks and the price went up, it shouldn't be hard for me to sell at all. But lets say I bought $20,000 worth of P&G stocks for $90. And lets say at the end of today its at $100. On a scale of 1-10 (10 being the hardest) how hard do you think it would be for me to dump all $20,000 the next day for $99 or above at the beginning of the next day? What about if it was $100,000 worth of stocks?

I'm asking this question because I'm trying to figure out what is the amount of stock when it starts to become hard to sell it all because you own so much of it...

Answer 1

Your question is based on the question of liquidity. People dump real estates for stock market is because it has a 100 percent liquidity ratio. No amount is bigger here. Problem is too much of sales would bring the rates down.

Answer 2

The 3 month average volume for shares traded per day in Proctor & Gamble is 13.5 million shares per day.  Your 50 shares or $20,000 or $100K is not enough to make a ripple in the market.  

To put it in perspective.  The NYSE is open for 6.5 hours of trading or 390 minutes.  13.5 million shares per day means about 34,500 shares traded per minute.  At today's close of $63 that means that $2,173,500 worth of Proctor and Gamble change hands per minute.  You'll be able to trade your position without a problem.  The bigger your position the more trades it might take.  But your broker and the automated system will get it done.

To answer your question you need to look at the large institutions (funds) and how they trade their holdings.  When entering or exiting positions they will trade slowly over the course of a few days or weeks.  Depending upon volume.  If they "dumped" 4 million shares of P&G on the market there would not be enough buyers and the price of the stock would be driven down.  Which would be contrary to what the fund would want to have happen.

The largest holder of P&G is Barclays with about 128 million shares ($900 million).  It would take them about 9 or 10 days to sell off that position if they were the only ones selling the stock at current daily volume, in reality it would take them longer.

Answer 3

100K of a company of P&G's size is peanuts. You're not going to appreciably impact the market price of the stock. If you follow the size of sales on your trading site, you'll see that this size transaction is very common, particuarly toward the end of a trading day.

If you're trading in smaller volume stocks, you can/will impact the price, so be aware of the size/volume of your stock/market.  Light trading days can be tough in a stock that's already light volume, because you may not have a ready buyer if a market surprise pops up.  This can always happen, in theory, but NYSE traders are required to make a market on your stock.

As long as you're selling on the upswing, you're likely not going to see much if any impact. You especially won't if you stay in high volume, NYSE-traded stocks.

Always remember that if you're in a NASDAQ-traded stock, the trader has the right to reject any stop/loss order at any time. So don't use stop loss feature with a preset sell price if you're wanting a known sale.  And of course if you use market sell to assure a quick sale, you always run the risk of a descending price move at the moment you launch your sale.

Your question about the "next day" sale price is moot, because so many overnight factors, and morning of factors, regarding economic news, market news, and acts of God can impact price.

Answer 4

If you were throwing around millions of dollars, you would have break up your purchases and sells but for $100K, just use a limit order ( it sets the maximum price you will buy for or minimum price you will sell for).

I pulled some numbers for PG:

194.3 Billion Market Capitalization

3.1 Billion Shares Outstanding

18.3 Million Avg Vol (10 day)

If your ever lucky enough to throw enough stock around to effect these numbers, break your purchase and sells up. I'm talking about during regular hours. You could have issues with the quantities your talking about in pre or post market trading.  That's a good place to get ripped off.

Answer 5

20k of PG is a small amount. You will find it easy to sell the stocks. You could even sell a few million worth of PG if you wanted, but you would want to spread it out over a day (or maybe more).

It all depends on the stock you are trying to sell. The market capitalization of the stock, its stock price and its trading volume all impact how much you can sell without causing the stocks price to decline. Selling a 100k worth of a company like AAPL will not be noticeable (you'd need to sell millions of dollars of stock since it has HUGE daily volume). On the other hand selling 100k worth of a small cap company with light trading volume might cause the stock to tank.