Hot answers tagged

19 votes
Accepted

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

The current quote is $996 x $1000 The bid represents the highest price someone is willing to pay ($996) The ask price is the lowest price someone is willing to sell at ($1,000) As a buyer at the ...
user avatar
  • 73.6k
17 votes
Accepted

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

The earliest order is the price. If the seller submits a Limit Order to Sell at $10 at 9:30 AM, it will enter the order book and $10 will be shown to the world as Best Ask. Then if the buyer ...
user avatar
  • 10.1k
14 votes

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

The ask price is the price the stock is sold at, and the bid price is the price people are willing to buy it for. So when you bought the stock for $1000, and you want to sell it for $1020, then that ...
user avatar
  • 21.6k
10 votes

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

The words are straight forward, bid is what someone bids for your shares; ask is what someone asks for his shares, if you care to buy them. But if the literal interpretation is difficult to remember:...
user avatar
  • 36.7k
8 votes

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

Market makers make the spread on market orders, only. A market order is one in which the retail buyer/seller says fill the order immediately at whatever is the best price. The market maker is buying ...
user avatar
  • 81
8 votes
Accepted

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

It means that the market has dropped and someone is willing to sell below the last traded price. So there is some level of selling pressure that is driving prices down. could the beneath last ask ...
user avatar
  • 113k
6 votes
Accepted

Help Understanding Market/Limit Orders and Bid/Ask Price

Your logic breaks down because you assume that you are the only market participant on your side of the book and that the participant on the other side of the book has entered a market order. Here's ...
user avatar
  • 8,482
6 votes
Accepted

How is the value of (crypto)currencies determined?

You have "ask" and "bid" the wrong way around in your second paragraph. "Ask" is the amount someone is asking you to pay them in exchange for one of their units of whatever. "Bid" is what someone is ...
user avatar
  • 3,363
6 votes
Accepted

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

In US public stock markets there is no difference between the actions individual retail traders are "permitted" to take and the actions institutional/corporate traders are "permitted" to take. The ...
user avatar
  • 5,987
6 votes
Accepted

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

There is no perfect answer to this question, and you will always have a tradeoff between likelihood of executing the order and the price you wish to achieve. The only way to be certain to execute ...
user avatar
  • 548
6 votes
Accepted

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

This is governed not by the brokerage but by the exchange, specifically the "opening rotation" procedure. If there is a sell (limit) order at $10 and a buy order at $11 going into the open, the first ...
user avatar
  • 28k
6 votes
Accepted

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

These "absurd bid and ask prices" are called "stub quotes". A stub quote is an offer to buy or sell a stock at a price so far away from the prevailing market that it is not ...
user avatar
  • 14.7k
6 votes
Accepted

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

Odd lots (less than 100 shares) are not covered by NBBO regulations and they do not update the quote. Read this.
user avatar
  • 73.6k
6 votes

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

I thought it might be fun to add more detail on how a trade happens. I used to work as a programmer for day traders, and that was a wonderful crash course on how markets work on the second-to-second ...
user avatar
5 votes

Why am I unable to buy at the ask price?

The price is moving higher so by the time you enter your order and press buy, a new buyer has already come in at that time and taken out the lowest ask price. So you end up chasing the market as the ...
user avatar
  • 20.8k
5 votes

How does the spread on an orderbook affect shorting?

Terminology Bid A bid is an offer to buy something on an order book, so for example you may post an offer to buy one share, at $5. Ask An ask is an offer to sell something on an order book, at a ...
user avatar
5 votes
Accepted

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

There could be a number of reasons: The price hit your number ($39.70) but by the time your order hit the market, the price had gone up. Perhaps the stock went up between when you placed the stop ...
user avatar
  • 3,943
5 votes

What is the role of a Market maker?

The role of the market maker is to make sure there is a bid and ask on a particular stock. That's it. The market maker ensures that there is a price at which you can buy and a price at which you can ...
user avatar
  • 14.8k
5 votes
Accepted

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

After the close, traders and market makers pull their bids and offers before going home. That results in the B/A spread widening, more so for illiquid stocks. For your stock, the quote was $129.34 x ...
user avatar
  • 73.6k
5 votes

Confusion on Bid vs. Ask and Spread; Profits

how does a person make a profit when buying stock? You don't. Profit is made when you sell at a higher price than what you bought it at. Consider the man with an apple cart selling apples. Does he ...
user avatar
  • 48.7k
4 votes

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

My question is would my trade likely have actually executed at that price in the morning In this specific example unlikely. The ETF is highly traded and the price in the morning when trade would get ...
user avatar
  • 56.5k
4 votes

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

Both of them are a dollar amount. They both refer to the money. The ask is someone asking for money: they are offering to sell. The bid is someone bidding a certain amount of money: they are trying to ...
user avatar
4 votes

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

This income comes from fact most people don't want to wait and just buy/sell on current price. While market maker is ready to wait and buys/sells on a better price. Here is a simple example: 1) MM ...
user avatar
  • 141
3 votes

Help Understanding Market/Limit Orders and Bid/Ask Price

At any point of time, buyer wants to purchase a stock at lesser price and seller wants to sell the stock at a higher price. Let's consider this scenario Company XYZ is trading at 100$, as stated ...
user avatar
  • 29
3 votes
Accepted

Can I use the terms ask and bid in a service market?

That sounds fine to me...certainly it means the right thing, even if it may not be the most common way to describe it in a non-financial context. Instead of "ask" you can use "offer price." Both of ...
user avatar
  • 14.8k
3 votes

How do hidden orders affect bid/ask price?

The bid and the ask are the best displayed limit orders. This means non-display orders to buy should not affect the bid, ever. They won't affect the ask unless a transaction occurs. There are four ...
user avatar
  • 14.8k
3 votes

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

Sounds to me like you're describing just how it should work. Ask is at 30, Bid is at 20; you offer a new bid at 25. Either: A market maker fulfills your order A new entrant matches your offer ...
user avatar
  • 34.6k
3 votes

Bid/Ask Price Clarification [Real examples]

"Price" is often the last traded price. It's possible in the first example that the last trade was at 149.20 but a sell order at 149.05 came in after that trade. Same (in the other direction) for ...
user avatar
  • 113k
3 votes

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

Suppose the bid is $10 and the ask is $12. All you have to remember is that the bid/ask spread never works in your favour: when you sell, you'll be paid the lower of these prices ($10, the bid) and ...
user avatar
  • 1,520

Only top scored, non community-wiki answers of a minimum length are eligible