This is a little saying I've read a couple of times in various places, but what does it really mean?
Most of us will recognise that If a candlestick on a chart has high volume, there is probably some sort of heightened interest in the stock for whatever reason. This high volume attracts attention, and in turn maintains or further increases the volume over coming days. Not always the case of course, but I would say that is where the saying comes from.
Then I was thinking...
Does it also apply to on screen orders?
Will a large on screen buy order attract other buyers, or a large seller? Quite possibly. It would allow the seller to exit his position with minimal price movement.
A large sell order above the bid will likely cause others to sell, possibly at a lower price. But, my gut feel/experience is that it will not normally attract large buy orders.
Have others noticed this? Large buyers attract sellers but large sellers don't attract buyers?
What is the reasoning behind this? 1 person wants to sell... and the price tumbles. Does it simply have to do with the timing of events? Big buy orders normally come when the price is rising, people want to buy. Big sells come when the price is falling, so create further selling pressure.
Or is there a perception that large sellers 'know best'? I feel that often small sellers will be passed off by the market as uninformed, or inexperienced. I often see a large seller put an order on market and it's as if every other holder thinks 'that guy's selling, something must be wrong'. Even potential buyers run scared.
Is there a general perception that current holders of a stock know better than those looking to buy?
Bit of a random ramble.