Why does a stock price drop as soon an I purchase several thousand shares at market price?
Any time a large order it placed for Buy, the sell side starts increasing as the demand of Buy has gone up. [Vice Versa is also true]. Once this orders gets fulfilled, the demand drops and hence the Sell price should also lower. Depending on how much was the demand / supply without your order, the price fluctuation would vary. For examply if before your order, for this particular share the normal volume is around 100's of shares then you order would spike things up quite a bit. However if for other share the normal volume is around 100000's then your order would not have much impact. You say: Every time it seems the share price dips. Does it?  Have you collected the data?   It may just be that you are remembering the events that seem most painful at the time. To move the market with your trade you need to be dealing in a large amount of shares.    Unless the stock is illiquid (e.g most VCT in the UK), I don’t think you are dealing in that large a number; if you were then you would likely have access to a real time feed of the order book and could see what was going on. Unless you are buying millions of dollars worth of a stock at a time, your transaction is a drop in the bucket, unlikely to have any noticable effect on the stock price. As Ian says, it's more likely that you are just remembering the times when the price dropped after you bought. If you keep careful track, I suspect you will find that the price goes up more often than it goes down, or at least, that the stocks you buy go up as often as the average stock on the market goes up. If you actually kept records and found that's not true, the most likely explanation is bad luck. Or that someone has placed a voodoo curse on you. I suppose one could imagine other scenarios. Like, if you regularly buy stock based on recommendations by well-known market pundits, you could expect to see a temporary increase in price as thousands or millions of people who hear this recommendation rush to buy, and then a few days or weeks later people move on to the next recommendation, the market setttles down, and the price reverts to a more normal level. In that case, if you're on the tail end of the buying rush, you could end up paying a premium. I'm just speculating here, I haven't done a study to find if this actually happens, but it sounds plausible to me. "You might consider learning how the ""matching"" or ""pairing"" system in the market operates.  The actual exchange only happens when both a buyer and a seller overlap their respect quotes.   Sometimes orders ""go to market"" for a particular volume.  Eg get me 10,000 Microsoft shares now.  which means that the price starts at the current lowest seller, and works up the price list until the volume is met.  Like all market it trades, it has it's advantages, and it's dangers.  If you are confident Microsoft is going to bull, you want those shares now, confident you'll recoup the cost.  Where if you put in a priced order, you might get only none or some shares. Same as when you sell.  If you see the price (which is the price of the last completed ""successful"" trade.  and think ""I'm going to sell 1000 shares"". then you give the order to the market (or broker), and then the same as what happened as before.  the highest bidder gets as much as they asked for, if there's still shares left over, they go to the next bidder, and so on down the price... and the last completed ""successful"" trade is when your last sale is made at the lowest price of your batch. If you're selling, and selling 100,000 shares. And the highest bidder wants 1,000,000 shares you'll only see the price drop to that guys bid.  Why will it drop (off the quoted price?).  Because the quoted price is the LAST sale, clearly if there's someone still with an open bid on the market...then either he wants more shares than were available (the price stays same), or his bid wasn't as high as the last bid (so when you sale goes through, it will be at the price he's offering).   Which is why being able to see the price queues is important on large traders. It is also why it can be important put stops and limits on your trades, een through you can still get gapped if you're unlucky.  However putting prices (""Open Orders"" vs ""(at)Market Orders"") can mean that you're sitting there waiting for a bounce/spike while the action is all going on without you). safer but not as much gain (maybe ;) ) that's the excitement of the market, for every option there's advantages...and risks... (eg missing out) There are also issues with stock movement, shadowing, and stop hunting, which can influence the price. But the stuff in the long paragraphs is the technical reasons."
If you are looking at long-term investments then you can look to Dheer's answer and see that it doesn't matter whether the money is large or small, the return will be the same.  When it comes to shorter-term investments, it can actually pay to be a smaller investor. Consider a stock that may not be trading in high volume. If I want to take a position for 2,000 shares, I can probably buy it quite quickly without moving the market considerably.  If I was managing your hypothetical portfolio opening a position for 1,000,000 shares, it can cause the price to go up significantly because I have to execute the order very carefully in order to not tip my hand to the market that I want a million shares.  Algorithmic traders will see the volume increasing on those shares and will raise their asking price. High speed traders and market makers will also cause a lot of purchasing overhead. Then later when it comes time to sell, I will lose a percentage to the price drop as I start flooding the market with available shares. "In an IPO (initial public offering) or APO (additional public offering) situation, a small group of stakeholders (as few as one) basically decide to offer an additional number of ""shares"" of equity in the company. Usually, these ""shares"" are all equal; if you own one share you own a percentage of the company equal to that of anyone else who owns one share. The sum total of all shares, theoretically, equals the entire value of the company, and so with N shares in existence, one share is equivalent to 1/Nth the company, and entitles you to 1/Nth of the profits of the company, and more importantly to some, gives you a vote in company matters which carries a weight of 1/Nth of the entire shareholder body. Now, not all of these shares are public. Most companies have the majority (51%+) of shares owned by a small number of ""controlling interests"". These entities, usually founding owners or their families, may be prohibited by agreement from selling their shares on the open market (other controlling interests have right of first refusal). For ""private"" companies, ALL the shares are divided this way. For ""public"" companies, the remainder is available on the open market, and those shares can be bought and sold without involvement by the company. Buyers can't buy more shares than are available on the entire market. Now, when a company wants to make more money, a high share price at the time of the issue is always good, for two reasons. First, the company only makes money on the initial sale of a share of stock; once it's in a third party's hands, any profit from further sale of the stock goes to the seller, not the company. So, it does little good to the company for its share price to soar a month after its issue; the company's already made its money from selling the stock. If the company knew that its shares would be in higher demand in a month, it should have waited, because it could have raised the same amount of money by selling fewer shares. Second, the price of a stock is based on its demand in the market, and a key component of that is scarcity; the fewer shares of a company that are available, the more they'll cost. When a company issues more stock, there's more shares available, so people can get all they want and the demand drops, taking the share price with it. When there's more shares, each share (being a smaller percentage of the company) earns less in dividends as well, which figures into several key metrics for determining whether to buy or sell stock, like earnings per share and price/earnings ratio. Now, you also asked about ""dilution"". That's pretty straightforward. By adding more shares of stock to the overall pool, you increase that denominator; each share becomes a smaller percentage of the company. The ""privately-held"" stocks are reduced in the same way. The problem with simply adding stocks to the open market, getting their initial purchase price, is that a larger overall percentage of the company is now on the open market, meaning the ""controlling interests"" have less control of their company. If at any time the majority of shares are not owned by the controlling interests, then even if they all agree to vote a certain way (for instance, whether or not to merge assets with another company) another entity could buy all the public shares (or convince all existing public shareholders of their point of view) and overrule them. There are various ways to avoid this. The most common is to issue multiple types of stock. Typically, ""common"" stock carries equal voting rights and equal shares of profits. ""Preferred stock"" typically trades a higher share of earnings for no voting rights. A company may therefore keep all the ""common"" stock in private hands and offer only preferred stock on the market. There are other ways to ""class"" stocks, most of which have a similar tradeoff between earnings percentage and voting percentage (typically by balancing these two you normalize the price of stocks; if one stock had better dividends and more voting weight than another, the other stock would be near-worthless), but companies may create and issue ""superstock"" to controlling interests to guarantee both profits and control. You'll never see a ""superstock"" on the open market; where they exist, they are very closely held. But, if a company issues ""superstock"", the market will see that and the price of their publicly-available ""common stock"" will depreciate sharply. Another common way to increase market cap without diluting shares is simply to create more shares than you issue publicly; the remainder goes to the current controlling interests. When Facebook solicited outside investment (before it went public), that's basically what happened; the original founders were issued additional shares to maintain controlling interests (though not as significant), balancing the issue of new shares to the investors. The ""ideal"" form of this is a ""stock split""; the company simply multiplies the number of shares it has outstanding by X, and issues X-1 additional shares to each current holder of one share. This effectively divides the price of one share by X, lowering the barrier to purchase a share and thus hopefully driving up demand for the shares overall by making it easier for the average Joe Investor to get their foot in the door. However, issuing shares to controlling interests increases the total number of shares available, decreasing the market value of public shares that much more and reducing the amount of money the company can make from the stock offering." In order: A seller of the stock (duh!). You don't know who or why this stock was sold. It could be any reason, and is of no concern of yours. It doesn't matter. Investors (pension funds, hedge funds, individual investors, employees, management) sell stock for many reasons: need cash, litigation, differing objectives, sector rotation, etc. To you, this does not matter. Yes, it does affect stock market prices: If you were not willing to buy that amount of shares, and there were no other buyers at that price, the seller would likely choose to lower the price offered. By your purchase, you are supporting the price. Of course, this calculation does not take into consideration the fact that once the rights are issues, the price of the shares will drop. Usually this drop corresponds to the discount. Therefore, if a rights issue is done correctly share price before issuance-discount=share price after issuance. In this result, noone's wealth changes because shareholders can then sell their stock and get back anything they had to put in. "You can do several things: After the fact: If you believe the stock will go up, you can buy more stock now, it's what's called ""averaging"". So, you bought 100 at $10, now it's at $7. To gain money from your original investment it needs to raise to over $10. But if you really think it'll go up, you can buy and average. So you buy, say, 100 more stock at $7, now you have 200 shares at $8.50 average so you gain money on your investment when the stock goes over $8.50 instead of $10.  Of course, you risk losing even more money if the stock keeps going down. Before the fact: When you buy stock, set 'triggers'. In most trading houses you can set automatic triggers to fire on conditions you set. When you buy 100 shares at $10, you can set a trigger to automatically sell the 100 shares if it drops below $9, so you limit your losses to 10% (for example)." "If you're talking about a single stock, you greatly underestimate the chances of it dropping, even long-term. Check out the 12 companies that made up the first Dow Jones Industrial Average in 1896. There is probably only one you've heard of: GE. Many of the others are long gone or have since been bought up by larger companies. And remember these were 12 companies that were deemed to be the most representative of the stock market around the turn of the 20th century. Now, if you're talking about funds that hold many stocks (up to thousands), then your question is a little different. Over the long-term (25+ years), we have never experienced a period where the overall market lost value. Of course, as you recognize, the psychology of investors is a very important factor. If the stock market loses half of its value in a year (as it has done a few times), people will be inundated with bad news and proclamations of ""this time it's different!"" and explanations of why the stock market will never recover. Perhaps this may be true some day, but it never has been thus far. So based on all the evidence we have, if you hold a well-diversified fund, the chances of it going down long-term (again, meaning 25+ years) are basically zero." It definitely depends on the exchange you are trading on. I'm not familiar with Scottrade, but a standard practice is to fulfill limit orders in the order they are placed.   Most of the time, you wouldn't see stocks trade significantly under your bid price, but since penny stocks are very volatile, it's more likely their price could drop quickly past your bid and then return above it while only fulfilling a portion of the orders placed. Example 1. Penny stock priced at $0.12 2. Others place limit orders to buy at $0.10 3. You place limit order to buy at $0.10 4. Stock price drops to $0.07 and some orders are filled (anything $0.07 or higher) based on a first-come first-served basis 5. Due to the increase in purchases of the penny stock, the price rises above $0.10 before your order is filled ***EDIT*** - Adding additional clarification from comment section. A second example If the price drops from $0.12 to $0.07, then orders for all prices from $0.07 and above will start to be filled from the oldest order first. That might mean that the oldest order was a limit buy order for 100 shares at $0.09, and since that is above the current ask price, it will be filled first. The next order might be for 800 shares at $0.07. It's possible for a subset of these to be filled (let's say 400) before the share's price increases from the increased demand. Then, if the price goes above $0.10, your bid will not be filled during that time. News about a company is not the only thing that affects its stock's price. There is also supply and demand.  That, of course, is influenced by news, but it is not the only actor.  An insider, with a large position in their company's stock, may want to diversify his overall portfolio and thus need to sell a large amount of stock.  That may be significant enough to increase supply and likely reduce the stock's price somewhat. That brings me to another influence on stock price: perception.  Executives, and other insiders with large positions in their company's stock, have to be careful about how and when they sell some of that stock as to not worry the markets.  Many investors watch insider selling to gauge the health of the company. Which brings me to another important point.  There are many things that may be considered news which is material to a certain company and its stock.  It is not just quarterly filings, earnings reports and such.  There is also news related to competitors, news about the economy or a certain sector, news about some weather event that affects a major supplier, news about a major earthquake that will impact the economy of a nation which can then have knock-on effects to other economies, etc... There are also a lot of investors with varying needs which will influence supply and demand.  An institutional investor, needing to diversify, may reduce their position in a stock and thus increase supply enough that it impacts the stock's price.  Meanwhile, individual investors will make their transactions at varying times during the day.  In the aggregate, that may have significant impacts on supply and demand. The overall point being that there are a lot of inputs and a lot of actors in a complicated system.  Even if you focus just on news, there are many things that fall into that category. News does not come out at regular intervals and it does not necessarily spread evenly.  That alone could make for a highly variable environment.