The buyer sweeps the limit orders, and the seller sweeps the limit orders. What is the difference?

In the context of stock trading, “sweeping the limit orders” refers to the process of executing a large number of buy or sell orders at a specific price level, effectively “clearing out” the limit orders that are resting at that level.

Buyer Sweeps the Limit Orders:
When a buyer “sweeps” the limit orders, it means they are purchasing a significant number of shares at a specific price level. By doing so, they are executing their buy orders against the existing sell limit orders at that price level. As they buy up these shares, the sell limit orders are removed from the order book. This increased demand for shares can lead to an increase in the stock price, as the available supply at that price level decreases.

Seller Sweeps the Limit Orders:
When a seller “sweeps” the limit orders, it means they are selling a substantial number of shares at a specific price level. This action removes the buy limit orders at that price level from the order book. As a result, the supply of shares at that price level increases due to the executed sell orders. This increased supply can lead to a decrease in the stock price as demand may not be sufficient to absorb the newly available shares.

The difference between buyer sweeping limit orders and seller sweeping limit orders is that buyer sweeping limit orders increase the demand of a stock, causing its price to rise, while seller sweeping limit orders increase the supply of a stock, causing its price to fall.

It’s worth noting that sweep buying or selling can also be a sign of manipulation, for example, when a big player is trying to push the price of the stock up or down, by buying or selling large chunks of shares.

Also, stock market dynamics can be complex, and there might be cases where the impact on the stock price isn’t immediate or as straightforward as described.

In summary, “sweeping the limit orders” refers to the process of executing a large number of buy or sell orders at a specific price level, effectively “clearing out” the limit orders that are resting at that level. Buyer sweeping limit orders increase the demand of a stock, causing its price to rise, while seller sweeping limit orders increase the supply of a stock, causing its price to fall.