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Questions tagged [bid-ask]

For questions related to the pricing details of securities in markets where there exists the notion of "resting orders" or an "order book".

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24 votes
3 answers
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How does a dealer (or market maker) earn the bid-ask spread on a stock?

If I am correct, dealers purchase assets for their own accounts, and later sell them for a profit from their inventory. But the spreads is the difference between buy (or "bid") prices and sell (or "...
Tim's user avatar
  • 5,883
8 votes
3 answers
3k views

When I buy a stock, should I track the bid price?

If I bought a share for $1000 (bid: $996, ask: $1000) and I want to take a profit of $20, should the stock price move up by 2% (20/1000) or 2.4% (20/1000 + 4/1000)?
huab's user avatar
  • 927
8 votes
1 answer
2k views

What is the final price if the bid price exceeds the ask price in an order driven market? [duplicate]

Let's assume a very simplified situation. There is only one seller asking for 10$ and there is only one buyer bidding 20$. At what price would the transaction go? Some answers say it won't, because ...
Mateusz Grotek's user avatar
7 votes
6 answers
6k views

Why do I get a much better price for options with a limit order than the ask price?

When I'm buying an option, I notice that if I set a limit order for in between the ask and bid - say half way, I can often get the option at that price. Why is it that way? I thought the ask price ...
user3413723's user avatar
6 votes
7 answers
11k views

How to remember and not to mix the bid and ask prices

Maybe it seems a very silly question but I think it is not. I am working as developer for a firm and I have a huge problem to remember and distinguish what the bid and the ask prices are. I know that ...
david.t_92's user avatar
6 votes
3 answers
3k views

If the spread goes to the market-maker, is the market-maker the exchange?

I understand that the bid-ask spread is the difference between the price a buyer is willing to pay and the price a seller is willing to take for an asset. I also understand that this difference goes ...
Kinnard Hockenhull's user avatar
6 votes
3 answers
5k views

How to set a sell limit order that will actually execute?

I'm having trouble getting a good answer to this with Google. I'm also new to this. Haven't actually tried it yet. I have several hundred shares of a security that I'm hoping to sell. Let's say bids ...
Mose's user avatar
  • 63
5 votes
2 answers
4k views

How do hidden orders affect bid/ask price?

I am little confused on basic bid-ask concepts. Let's suppose I have a BUY order i.e I want to buy shares. I can either place the order at BID price, lower than BID price or higher than bid price....
user2961712's user avatar
4 votes
1 answer
162 views

Why didn't my buy limit order become the highest bid?

I am trying to buy a stock that is $307 bid and $312 offered. I placed a buy limit order for 1 share at $307.10. However, the best bid remained at $307.00. After an hour, the best bid is still $307.00....
Flux's user avatar
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3 votes
2 answers
588 views

Why do market makers sometimes quote absurd bid and ask prices rather than remove their quotes?

The image below shows the Level 2 bids for Fortescue Metals Group Ltd (OTCQX: FSUMF) on 2020-10-07 10:20 am: Notice the 0.01 × 10,000 bid by NITE (Virtu Americas LLC), which is extremely unlikely to ...
Flux's user avatar
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3 votes
2 answers
2k views

How are limit orders executed at market open when the bid price is above the ask price (negative spread)?

In what order and at what price would these orders be executed? Consider the case that both the buyer and the seller submitted orders to their brokers while the market was closed. It seems logical to ...
notAlex's user avatar
  • 142
3 votes
3 answers
3k views

Would a market buy order execute at a ridiculous ask price?

I was looking at a Vanguard ETF after the market had closed. The ETF usually trades in the 80 dollar range. I was looking to put in a market order for some shares that would execute the next morning ...
JDP's user avatar
  • 31
3 votes
1 answer
1k views

Can a retail trader do bid-ask spread scalping through algo-trading?

Is it legal/permitted in the US public stock markets for an individual retail trader to do bid-ask spread scalping through algorithmic trading? Do I need to follow some procedure before I can ...
Distraction Arrestor's user avatar
3 votes
2 answers
4k views

Why am I unable to buy at the ask price?

I was trying to buy ProShares Short Dow30 ETF (NYSE Arca: DOG). I put in a limit order at the ask price not the bid price since I want the order to execute all at once. The ask price is a penny more ...
shwe's user avatar
  • 47
3 votes
1 answer
128 views

Ask & Bid yield calculation problem

Does anyone know how the ask and bid yields are calculated on this corporate bond? I tried to use BEY calculation but I keep arriving at different answers. Does anyone know what the $500K means? If ...
Ron Jab's user avatar
  • 31
3 votes
3 answers
1k views

Backtesting daytrading strategy, how to handle the spread?

I am currently developing a daytrading application which based on rules and algorithms buys or sells stocks, which right now might buy/sell a stock in the magnitude of 100 per day. I am trying to ...
Cleared's user avatar
  • 133
3 votes
1 answer
323 views

Why there are lot of 100 shares packs in Stock Exchanges?

I just checked live Bid/Ask Quotes for XPeng Inc (XPEV) in Nasdaq website and i notice that there are lot of 100 volume trades. Also i chekced other stocks and they also have same trades of 100 volume....
leonidas efrem's user avatar
2 votes
4 answers
918 views

How do market makers profit from the bid-ask spread when bids are almost always lower than asks?

I am familiar with how currency exchange booths at airports make some of their money: from the bid-ask spread. For example, they will say: "you can sell us 1 USD for 1.32 CAD, and you can buy 1 USD ...
Flux's user avatar
  • 17.1k
2 votes
3 answers
2k views

What does it mean with the ask price is below the last price?

Typically, I am accustomed to seeing things like {"ask":1.0123, "last":1.0118, "bid":1.0113} but every now and then I'll catch something doing {"ask":1.0118, "last":1.0123, "bid":1.0113}, what, if ...
Never Nor's user avatar
  • 133
2 votes
2 answers
1k views

Setting a trailing stop loss at $39.70 bid price, stock sold at $41

I just set a trailing stop loss on some stock I had before the correction we are going through right now for 10% below the bidding price. This means at $39.70, the stop loss should have been ...
pauliwago's user avatar
  • 145
2 votes
2 answers
801 views

How does the spread on an orderbook affect shorting?

Say I wanted to short ABC Company because I believe the stock price will go down 7% or more. The ask price is $6 and the bid price is $5. Volume is 4-5 Million shares. I decide to short $2000 dollars ...
Bob's user avatar
  • 29
2 votes
2 answers
588 views

Bid/Ask Price Clarification [Real examples]

Bid: $148.94 Ask: $149.05 Price $149.20 (Market) Can someone explain to me why my final purchase price with the market price doesn't equal to $149.05? From my understanding, isn't that the minimum ...
Kaguya Ōtsutsuki's user avatar
2 votes
1 answer
133 views

How market orders are filled?

When we look at the stock price S of a stock, then if I am correct S is equal to the average between the highest bid and the lowest ask for this stock. Hence since the highest bid is lower than the ...
ConfusionMatrix's user avatar
2 votes
1 answer
62 views

Best way to determine price of an asset based on set of seller and buyer offers?

Lets say we have a fungible asset (stocks, gold, currency, crypto, etc.) that is freely traded on a market. The way this works is that people can submit buy and sell (bid and ask) offers. If a sell ...
user2741831's user avatar
2 votes
1 answer
1k views

Does a market-maker make any money in a liquid asset with tight bid-ask spread?

In a liquid asset like SPY, is there any market-maker making markets? It seems that with such tight spreads, there is no incentive for the market-maker to operate in this underlying. But then, again, ...
Victor123's user avatar
  • 16k
2 votes
2 answers
2k views

Do market-makers always quote a bid and ask simultaneously?

I am trying to understand some market-maker (MM) data that I have. As a follow-up to a question I read about MM and to this piece of information on Investopedia, Market makers must maintain ...
Jean-Paul's user avatar
  • 239
2 votes
1 answer
408 views

What causes stock orders to execute outside the NBBO?

I was reading Stocks Order Routing and Execution Quality on Robinhood's help pages, which says: For example, in the third quarter of 2020, 97.53% of our customers' market orders for S&P 500 stock ...
Flux's user avatar
  • 17.1k
2 votes
1 answer
1k views

What does it mean in a stock when the Bid volume is 100x higher than the Ask volume?

I'm trying to understand how a certain stock fluctuates, I noticed periods recently when the Bid/Ask volume looks like 50,000/500 give or take. What does this mean in human language in terms of ...
lmlmlm's user avatar
  • 145
2 votes
1 answer
839 views

How do market-maker orders get filled?

My understanding is that a market-maker profits by selling at or above ask and buying at bid or below in securities where there is a bid/ask spread and that's how they make money. If that's, correct ...
user avatar
2 votes
1 answer
175 views

How do locked markets get resolved in a low-volume market?

Consider a low-volume exchange-traded security that sometimes sees no trading volume for days on end. Examples of such securities are some bonds, preferred shares, SPACs, and ETFs listed on the NYSE ...
Flux's user avatar
  • 17.1k
2 votes
1 answer
345 views

How do option prices change so quickly when stock price moves up or down?

It would take me at least 3 seconds to modify an existing order. When stock price rises or falls quickly, how do buyers and sellers change their prices so quickly? Do they really calculate option ...
Bhanu's user avatar
  • 21
2 votes
2 answers
160 views

Bid/Ask when trading ETFs?

Let's say it's an index-tracking ETF. Isn't the ETF price determined by the index value? Why does it have bid/ask spread then? Could someone explain the bid/ask concept when trading ETFs?
Danijel's user avatar
  • 298
2 votes
1 answer
238 views

Can a limit order be fullfilled with a better price than offered? [duplicate]

When a limit order is fulfilled, is it always at the specified price? In other words, is it possible that a buy (sell) order will be completed with a lower (higher) price?
Sparkler's user avatar
  • 518
2 votes
1 answer
730 views

bid & ask prices and technical indicators

I have a data set with historical prices (forex but I'm assuming it can be about stocks as well) - open, low, high, close - but there's two of each - bidopen, askopen etc. I want to use those data for ...
PiterS's user avatar
  • 23
2 votes
3 answers
1k views

What does it mean when the ask price stays the same but the bid price rises?

I've been taking a look at some stocks and I noticed that sometimes the bid rate begins to rise towards the ask price. While the ask price stays relatively the same. Is this indicative of an upward ...
lv_inno's user avatar
  • 23
2 votes
1 answer
341 views

Do I pay bid-ask spread if I trade on the NYSE?

From what I understand from this market-maker versus specialist discussion on Investopedia, the job of the specialist is to bring buyers and sellers together as opposed to a market-maker who buys from ...
Victor123's user avatar
  • 16k
1 vote
2 answers
563 views

Confusion on Bid vs. Ask and Spread; Profits

Stock A has a bid price of $100.08, an ask price of $100.10 and a last trade price of $100. I take that to mean that if I buy the stock at $100.10 then I will have lost a total of two cents. How does ...
Ethan's user avatar
  • 49
1 vote
3 answers
3k views

What do I need when I want to go short?

When I buy an asset and go long, then I order the asset with the BID-Price. If I sell it, then I need the ASK-Price for the sell order. What do I need when I want to go short? Is the following ...
nimo23's user avatar
  • 135
1 vote
2 answers
166 views

Why would a stock have a 30% spread (between Ask and Bid)?

If I am understanding this correctly, if I wanted to buy this stock, market price is $129 ish. If I want to sell, I'll get about 30% less, $98 ish. That seems like a huge spread. What are typical ...
Clay Nichols's user avatar
1 vote
1 answer
440 views

How is the value of (crypto)currencies determined?

My question concerns the valuation of currencies (specifically cryptocurrencies such as bitcoin). I understand that at any given point there may be people looking to sell currencies, the lowest of ...
Héctor van den Boorn's user avatar
1 vote
1 answer
175 views

Why do market-makers price themselves?

Why bother with an army of quants and complicated pricing models? Why not just use the market price to set your bid/ask and adjust the spread to something sensible and profitable? I understand if ...
JohnyC's user avatar
  • 21
1 vote
2 answers
423 views

What is the role of a market-maker?

I am trying to understand the role of a market-maker. So, the best bid and offer depend on where orders are resting, and these orders are from retail investors or institutions or whoever. Why is it ...
Jim Mcp's user avatar
  • 11
1 vote
1 answer
48 views

How is Ask calculated on an exchange?

How are Bid and Ask calculated? If someone offers to sell a single share of a stock at twice yesterday's price at closing, does that inflated price become the Ask? Or is Ask an average of some kind, ...
Tim's user avatar
  • 151
1 vote
1 answer
162 views

Who's on the other side of very illiquid option contract trades?

So I've been short selling Deep-in-the-Money, far from expiration Put Options on an ETF for about a year now, to profit from upward price movements on the underlying and time premium decay. Volume for ...
user avatar
1 vote
4 answers
552 views

Sometimes the Time & Sales shows trades in between the bid and the ask. How is that possible?

White prints on the Time & Sales means that a trade happened in between the bid and the ask. How is that even possible? The only two answers that come to my mind are. There was a hidden order in ...
Jan Charles Butter's user avatar
1 vote
1 answer
488 views

volume vs amount

Which version is right: Version 1: Amount = Volume x Price per asset Version 2: Volume = Amount x Price per asset I guess, version 2. But I am not sure.. When looking at an orderbook, the word ...
nimo23's user avatar
  • 135
1 vote
1 answer
96 views

How to estimate the average cost-per-share of a not-very-liquid ETF purchased with a market order?

I'm a Canadian resident and a few months ago I bought a US-listed Vanguard ETF of European stocks (VGK). There was a Canadian-listed version of this ETF (VE), but I chose the US-listed one because the ...
Pertinax's user avatar
  • 1,530
1 vote
2 answers
279 views

Should I consider the bid-ask spread as part of the transaction cost of a market order?

When I place a market order or marketable limit order that successfully executes, should I consider the bid-ask spread as part of the transaction cost of my order? The bid-ask spread is appears to be ...
Flux's user avatar
  • 17.1k
1 vote
5 answers
367 views

How are retail forex brokers different from betting shops?

I'm struggling to find differences between bookmakers and retail forex brokers (e.g. OANDA). The former deals with horse racing, greyhound racing and sports, while the latter deals with currency ...
user102086's user avatar
  • 1,242
1 vote
1 answer
268 views

Are there any stocks on NASDQ that have no bid or ask price displayed?

Are there any stocks on NASDQ or other electronic exchange that have no bid price displayed? I have never seen such stock but surely there must be a situation that no one wants to buy some worthless ...
Jimski's user avatar
  • 113