/biz/ - Business & Finance

>>27469544
My guess is that some Redditor or YouTuber made up the strategy of a 'short ladder attack' to convince people to hold their long positions. Somewhere on Reddit, there's an explanation that hedge funds lower their bids and trade shares with each other, fooling algorithms and driving price down. This is utter nonsense.

The National Best Bid and Offer (NBBO) is a Securities Exchange Commission (SEC) regulation requiring brokers to trade at the best available (lowest) ask price and the best available (highest) bid price when buying and selling securities for customers.

Any trader who bids less than NBBO to buy a security goes on the order book at a lower price as a limit order. The same holds true for a seller whose price is above NBBO. The only way that traders can move price is more buying (or selling) volume that is available at current price.

The reason that GME went from ~$468 to ~$120 in nearly a hour was a combination of profit taking and additional shorting (if shorting was still allowed that day). No one can drop share price by trading under the market.

https://money.stackexchange.com/questions/135807/closing-shorted-positions-via-short-ladder-attacks