How to interpret a big ask size?
Yes, but it must be remembered that these conditions only last for instants, and that's why only HFTs can take advantage of this. During 2/28/14's selloff from the invasion of Ukraine, many times, there were moments where there was overwhelming liquidity on the bid relative to the ask, but the price continued to drop.
"Everything you are doing is fine. Here are a few practical notes in performing this analysis: Find all the primary filing information on EDGAR. For NYSE:MEI, you can use https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000065270&type=10-K&dateb=&owner=exclude&count=40 This is the original 10-K. To evaluate earnings growth you need per share earnings for the past three years and 10,11,12 years ago. You do NOT need diluted earnings (because in the long term share dilution comes out anyway, just like ""normalized"" earnings). The formula is avg(Y_-1+Y_-2+Y_-3) / is avg(Y_-10+Y_-11+Y_-12) Be careful with the pricing rules you are using, the asset one gets complicated. I recommend NOT using the pricing rules #6 and #7 to select the stock. Instead you can use them to set a maximum price for the stock and then you can compare the current price to your maximum price. I am also working to understand these rules and have cited Graham's rules into a checklist and worksheet to find all companies that meet his criteria. Basically my goal is to bottom feed the deals that Warren Buffett is not interested in. If you are interested to invest time into this project, please see https://docs.google.com/document/d/1vuFmoJDktMYtS64od2HUTV9I351AxvhyjAaC0N3TXrA" It's based on potential. Things like market share, market size, competitive analysis and growth opportunity.    Ex: being as big as reddit is + the fact they are a large player = how they could leverage this to drive even more value than they currently have in the future  Also everything is inflated right now and the value factors in how much someone might (over) pay to acquire them. This is one of the simplest demonstrable examples of a non-intuitive result. (And has a ton of utility for corporate strategy, not just trade ... but many business managers do not understand it).  Statistics and exponential growth contain others simple-to-prove non-intuitive results. People need to study this type of stuff more ... brains are no good at understanding reality.  David Ricardo was *the* man. It is simply an average of what each analyst covering that stock are recommending, and since they usually only recommend Hold or Buy (rarely Sell), the value will float between Hold and Buy. Not very useful IMHO. I'm not exactly sure, but it may be due to liquidity preference.  SPY has a much higher volume (30d average of roughly 70m vs. 3.3m, 1.9m for IVV, VOO respectively), and similarly has a narrow bid ask spread of about 0.01 compared to 0.02 for the other two.  I could be wrong, but I'm going to leave this post up and look in to it later, I'm curious too. The difference is very consistent though, so it may be something in their methodology. It looks like the advice the rep is giving is based primarily on the sunk cost fallacy; advice based on a fallacy is poor advice. Bob has recognised this trap and is explicitly avoiding it. It is possible that the advice that the rep is trying to give is that Fund #1 is presently undervalued but, if so, that is a good investment irrespective if Bob has lost money there before or even if he has ever had funds in it. "In the first situation you describe, any intelligent routing algo will send a 1000 lot order to the lit exchange in step 1. Then you get filled 1000@$10. After the fill occurs, the matching engine tells everyone what happened.   If the order book consists of 100 orders of 1 lot @ $10, and you place a ""buy 100 lots"" order, here is what happens:  1. The matching engine receives your order. 2. The matching engine matches your order against the 100 individual orders on the book. 3. The matching engine broadcasts 100 trade notifications.   No one has any opportunity to cancel their orders since they only hear of the fill after it happened.   The only way someone would have the opportunity to cancel is if there was 500 lots on one exchange and 500 on another. Then someone might observe a trade on exchange #1 and cancel their sell order on exchange #2 in response." This sometimes happens to me. It depends on how liquid the option is. Normally what I see happening is that the order book mutates itself around my order. I interpret this to mean that the order book is primarily market makers. They see a retail investor (me) come in and, since they don't have any interest in this illiquid option, they back off. Some other retail investor (or whatever) steps in with a market order, and we get matched up. I get a fill because I become the market maker for a brief while. On highly liquid options, buy limits at the bid tend to get swallowed because the market makers are working the spread. With very small orders (a contract or two) on very liquid options, I've had luck getting quick fills in the middle of the spread, which I attribute to MM's rebalancing their holdings on the cheap, although sometimes I like to think there's some other anal-retentive like me out there that hates to see such a lopsided book. :) I haven't noticed any particular tendency for this to happen more with puts or calls, or with buy vs sell transactions. For a while I had a suspicion that this was happening with strikes where IV didn't match IV of other strikes, but I never cared enough to chase it down as it was a minor part of my overall P/L. First, If you buy $10K of a penny stock and try to sell it that afternoon, you probably won't get your money back. The bid/ask spread may cost you dearly.  On the shady side, if you are able to afford to trade enough shares to attract attention, the interest of those who believe the volume is an indication of some real event happening, you may pump it high enough to make some nice money, selling into the ensuing rise. This is a classic pump and dump (which often but not always, includes posts on message boards) and it is illegal. The same way this volume attracts traders, it can also attract the attention of the SEC.  This should be read as a narrative, not as advice. If anything, it's advice on what not to do. "I think for this a picture is worth a thousand words.  This is a ""depth chart"" that I pulled from google images, specifically because it doesn't name any security.  On the left you have all of the ""bids"" to buy this security, on the right you have the ""asks"" to sell the security.  In the middle you have the bid/ask spread, this is the space between the highest bid and the lowest ask.  As you can see you are free to place you order to the market to buy for 232, and someone else is free to place their order to the market to sell for 234.  When the bid and the ask match there's a transaction for the maximum number of available shares.  Alternatively, someone can place a market order to buy or sell and they'll just take the current market price. Retail investors don't really get access to this kind of chart from their brokers because for the most part the information isn't terribly relevant at the retail level." But what about the following scenario which is my paraphrasing of a Nanex article (I'm hoping you can help clarify this for me).  1. I observe a 1,000 lot @$10 advertised for Sell on a lit exchange.  2. I try to lift the 1,000 by placing a limit order @10.  3. My order goes through some kind of order routing process. First, 3 orders get executed on a dark pool. Let's say I got a 50 lot filled (so available offer reduces to 950).  4. My order hits a lit exchange. I get a partial fill for 100 (offer shrinks to 850); but the offered size shrinks instead to 500. Or 0.  5. Now, in order to execute my trade, I will have to take a higher price than the original advertised liquidity.  My question (maybe you can answer this) is why did my original order size of 1,000 appear in smaller blocks? Is this because the order routing algorithm breaks up the size?  Or is it that market makers only post offers in small block sizes (e.g. 100) So even if the order book looked like:  100 @ 10  100 @ 10  100 @ 10  100 @ 10  100 @ 10  100 @ 10  All the way to 1,000 total -- as soon as the first 100 shares were lifted, the MM can immediately cancel the remainder of the advertised liquidity -- in practical terms making it impossible to execute large orders at an advertised price. Please refer to this question to understand the basics of how an order is matched. How do exchanges match limit orders?  Now most of the times even Block orders follow the same matching criteria. I think you are assuming that for every large buy order there is a matching large sell order. This is not true.     So on the Buy side at various point in times there were Buy Orders, with Single order more than 10,000 shares. On the sell side to fulfil these orders there may or may not be a single order of 10,000. More often there will be quite a few smaller orders or 500, 1000 or whatever amount that are present in the queue based on the amount & time sort order or even partially matching out of a sell order of 10,000 ... Similarly when there is a large sell order of more than 10,000 , these may not have got filled in by a large buy order but by smaller buy orders etc ...   So if you average out the amounts on the buy side and the sell side there would definately be a difference. The analysis of this difference is as indicated in your question, buy price is more than sell price and hence people are bullish ... &gt;The scariest part of this single program was that its millions of quotes accounted for 10 percent of the bandwidth that is allowed for trading on any given day, according to Nanex.  Am I jumping to conclusions? if this was done at a scale ten times larger wouldn't that stop everyone trading for that day? How do you locate who's doing it? Can we stop it or just hope they don't power trip? Wouldn't it be obvious who made money off it if they do decide to use it for that reason?   Lots of questions because I'm a noob. Large volume just means a lot of market participants believe they know where the stock price will be (after some amount of time).  The fact that the price is not moving just means that about 50% of those really confident traders think the stock will be moving up, and about 50% of those really confident traders think the stock will be moving down. Essentially, yes, Peter Lynch is talking about the PEG Ratio. The Price/Earnings to Growth (PEG) Ratio is where you take the p/e ratio and then divide that by the growth rate (which should include any dividends).  A lower number indicates that the stock is undervalued, and could be a good buy. Lynch's metric is the inverse of that: Growth rate divided by the p/e ratio.  It is the same idea, but in this case, a higher number indicates a good value for buying. In either case, the idea behind this ratio is that a fairly priced stock will have the p/e ratio equal the growth rate.  When your growth rate is larger than your p/e ratio, you are theoretically looking at an undervalued stock.