Any of you guys watched the TV show Traders? It's 10 years old now and obviously most everything is automated (still a great show btw), but it got me thinking...
What about all the orders that are just an agreement between Party A and Party B? Party A maybe wants to sell 10,000 of XYZ and Party B wants to buy. They may agree to do it privately, in which case you don't see it on any market depth, you just see a big transaction blip.
Haven't given this much thought so could be wrong...
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Do Retail Trades Move Markets?
We conclude that over short and long horizons retail trade imbalances forecast
future returns. Over short horizons – such as a day or week – retail trades move stock
prices in the direction of their trades. Over long horizons like a year, the retail trades
move only the prices of small stocks in the direction of their trade. In combination the
contemporaneous price moves and subsequent reversals suggest retail trades move
markets – particularly among small stocks, where the trades of retail investors are most
likely to be influential.