How much stock can you buy before you start effecting its price?

[Shoe]

Just wondering if there is a general rule out there as to how much stock of a certain company you can buy before your actions start having a noticeable effect on the share price.

Would it be if you are buying/selling a certain percentage of their market share? a certain percentage of their average daily volume? something else?

Most of my trades are still rather small (less than $5k), and for most companies that won't even be a drop in the bucket. But there was a company today (XNL) that I was considering buying where that amount would have been about 3% of their daily volume. I do all my trades as "all or nothing" limit trades, meaning I set the price I'm willing to buy at and unless I can buy all the shares I want to buy at once, the trade won't go through (the other option would be to have multiples trades at 100 shares at a time until it fills my order -- I don't like this way because of the uncertainity it adds to if i'm actually going to fill my order or not -- and for the extra commission I would have to pay if i only had a partial order filled).

Also as a side question, are the all or nothing limit trades usually a good idea? or do you get to the point where you just have to place your order and see how many shares the market lets you get? My orders are still really small but within the next year I plan to be making $10-$20k trades (which I understand is still rather small -- but if i am buying all at once in a smaller company is that enough to make a difference?) - I know if it is a company like Yahoo or Google that it won't even be a drop in a bucket -- but in a company where it would be 10% of the average daily volume would it be hard to make a trade like that go through?

Hope everything I said was clear, if not feel free to ask any questions. Thanks in advance!

[Esection]

shoe.

get some streaming quotes.
sit down and check out the bid/ask spread.
start throwing bids or asks out there.
see what happens.
you will find an answer to your question.
if you sell too much, the price will go down.
if you buy too much, the price will go up.

this may seem elementary, but the market (aside from the specialist who smooths the liquidity out)is based on supply and demand, and the answer to your question basically depends on not the volume etc but if there are people willing to purchase/sell at those levels.

[Shoe]

Thanks for the reply. I do get streaming quotes and can see the current bid and ask prices, but as far as I know I cannot see how many shares people are trying to buy or sell at once at each price (I think this is called level 2 or something? -- does that cost extra or is it hard to get access to?).

[IdealFugacity]

If a stock is a good buy, why would you make a buy trade an "all or nothing" trade? Are the second thousand shares you pick up better than the first thousand?

[Perplexity]

3% of ADV is very small.

I would not spend any time thinking about the market impact until/unless you consider trades >10% of ADV.

(Note that you should be careful how you are measuring ADV. If you do something simple like just averaging the last 30 trading days, you can get a misleading result. Like maybe the stock had a major news day and traded $10M when it usually only trades $100K. If you just average you'll get an ADV of $430K. So you might think that $50K trade is no problem. But if it's a "regular" day and the stock is only trading $100K, you'll get hurt a lot trying to trade $50K. It's better to use a median instead of an average.)

[fanmail]

What's a good & possibly free site to get some streaming stock quotes with bids/offers available?

[Esection]

scottrade gives you free streaming quotes if you have an account with them.

you probably wont find free streaming quotes anywhere though (like on yahoo for example).

any website on the internet is going to have 20 minute delays.

[Shoe]

[ QUOTE ]
If a stock is a good buy, why would you make a buy trade an "all or nothing" trade? Are the second thousand shares you pick up better than the first thousand?

[/ QUOTE ]

Because if it only purchased very few shares (like 100) and then stopped it might not be worth the commission. Am I looking at that the wrong way? If I only filled a partial order I might have to make another buy that would add more commission, or when I go to sell, I need to pay commission again but won't be getting as much bang for my buck since I don't have as many shares to sell as I otherwise would have.

[IdealFugacity]

True

[NajdorfDefense]

[ QUOTE ]
3% of ADV is very small.

I would not spend any time thinking about the market impact until/unless you consider trades >10% of ADV.

[/ QUOTE ]

This is false. If you put in a market open order on 3% of the volume on a NYSE stock [and presumably OTC] you will move the market. 10% would move it a lot.