Random Question - Manipulating the Market

[jeremyjohnolson 19]

I was just wondering, say I had a ton of money, could I hypothetically manipulate the market by opening up two separate brokerage accounts and then buying and selling the same stock essentially to and from myself?  Like say I want to move the price of a stock down, I just hit buy on the bid in account A and sell on the bid in account B with large enough volume to move the price down.  I get that I would be out the commissions and fees, so it's not like I would make any money doing this, but I wouldn't lose much either, just the fees.  Then, when other trader's stops get triggered and the stock starts to gain downward (or upward) momentum on it's own and thus moves even further than where I drove it to by my buy/sell transaction, then I come in and buy more (or sell more) to increase (or decrease) my position at a lower (or higher) price.  Does this question make sense?  Does this happen in the real world?  Is this one possible way people can manipulate the market?  Or are there laws or anything stopping this practice?  Maybe I am missing something and this just isn't really possible anyway.  Just curious.

[jeremyjohnolson 19]

Haha, OK, I just realized the error of my own thinking, maybe I should just delete the post.  I don't know, who knows maybe someone else out there will have the same question (probably not lol).  Anyway, I think my question actually does not make any sense, because if I bought and sold to myself, I would not move the price since in order to move the price down or up, I have to buy up the liquidity or sell to down the ladder of existing bids.  If I am buying and selling to myself on the bid, then it would just be a net zero change in liquidity and thus not move the price at all.  In other words, I wouldn't eat up any existing liquidity because I would be adding to liquidity at the same time and by the same amount, I am taking it away.  So, anyway, just had a bit of a light bulb go off in my head right after I posted that question.

 

and yes, btw, I am a doofus haha!

Edited December 7, 2021 by jeremyjohnolson

[Bailey Nevener 83]

Your question is actually a fine one in my opinion, however, you wouldn't need to open two accounts to do this.

1. Short the bid with large share size in order to trigger stops.

2. Anticipate the distance the price will move down from the stops being triggered and place an order to cover your original short just beyond that predicted price to absorb the sales.

3. Place a buy order at that same price that will collect the remaining shares being sold due to stops being triggered.  With enough money, you could hold the price yourself.

4. Rebid the price back into the original range and let it drift to the upper side as you scale out.

5. Hold the bid at the lower end of the range (if it is revisited) from the profits of you scaling out in the first place (Thus risking no money)

6. If it breaks the lower end, close your position with a small loss.

This strategy could give you a great average cost just below the channel the price is stuck in, assuming that the stops are indeed triggered and are sufficient in size to fill your subsequent cover and buy order.

I'm not sure how much money or what other information would be needed to make this work predictably however.

Knowing the locations of stop orders would definitely help though.  (Level 3 quotes)

Edited December 8, 2021 by Bailey Nevener