What is impact of big, single market order to price? How an iceberg order can drive the market?
The usual day on market. The orange prices are in range. Somewhere 10 usd for 1 kilo, somewhere 12 usd. Customers keep
buying and prices slowly goes up, because of demand of the oranges.
But nobody knows that Mr, Baffet just received one truck of oranges instead of repayment of loan he gave to Mr. Soros.
So, the truck of oranges just arrived to market. Nobody knows what is inside, because it is covered.
The orange prices still going up slowly. Mr. Baffet uncovered his truck, shows that he has oranges and set the price to 8 usd for kilo. People, who are close to truck and are able to see the price, start to buy at lower prices and this price slowly starts to spread all over the market. The market is very big and it takes time to spread the lower price all over the market. Buyers no longer will buy more expensive oranges and the all buyers stands along the Mr. Baffet truck.
Small sellers must drop orange prices less than Mr. Baffet to be able to sell their oranges.
Mr. Baffet sold all his oranges, which one was uncovered and decide to calculate how much money he receives. The people went out from the truck, because they was thinking, that all oranges was sold and no more left for this price. Small sellers also think the same and start to rise the price of oranges trying to recover their loss.
But Mr. Baffet calculated all money and realised that it is not enogh and uncovered other part of oranges, which one was hidden and set the same price again. People, who started to buy at rising prices again, stopped and came back to Mr, Baffet truck for cheaper purchase. And story repeats, the quantity and price of Mr. Baffet oranges slowly spread across the market and nobody will buy more expensive oranges.