Order imbalances can often occur when major news hits a stock, such as an earnings release, change in guidance, or merger and acquisition activity. Imbalances can move securities to the upside or downside, but most imbalances get worked out within a few minutes or hours in one daily session. Smaller, less liquid securities can have imbalances that last longer than a single trading session because there are fewer shares in the hands of fewer people.
Investors can protect themselves against the volatile price changes that can arise from order imbalances by using limit orders when placing trades, rather than market orders.
Investment dictionary. Academic. 2012.
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