Hot answers tagged

19

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 current price, you will pay $1,000 If you want to make $20, your sale price must be $1,020. That means that the bid price must rise 2.41% (24/996) in order for your ...


14

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 would happen as soon as the bid price is $1020. However, the bid-ask spread is not a constant. So when the bid price is $1020, then the ask price is not ...


6

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 level. At its core, a market is a set of buyers and sellers seeking to make trades with each other, and they declare their intentions by making bids (an offer to ...


6

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 intended to be executed, such as an order to buy at a penny or an offer to sell at $100,000. A market maker may enter stub quotes to nominally comply with its ...


4

Odd lots (less than 100 shares) are not covered by NBBO regulations and they do not update the quote. Read this.


3

Yes, a price taker buys at ask price and sells at bid price and if the market maker is on the other side of the trades, he pockets the bid-ask spread. Note that trades means a trade at the bid and a trade at the ask. A market maker's posted quotes are not some fixed in stone price that you are forced to accept if you want to buy or sell a security. Any ...


3

The market maker has the responsibility of making a market in the security. That means that he must provide a quote that is subject to maximum width limitations as well as be willing to trade a minimum required volume at that price. He is under no obligation to fill your order at a better price. The fact that you are getting a fill at the midpoint means ...


3

Yield for a coupon-bearing bond is not a simple closed-form calculation. You have tried a few approximations that may be close (or maybe not), but the exact calculation requires you to look at the current cost of the bond (including any accrued interest), all future cashflows (the coupons plus the final redemption), and calculate the equivalent interest rate ...


2

What you pay for the security when you buy it is the cost and what you receive for selling it is the proceeds. These are the numbers that you 'record' and they are used for determining P&L, ROI, taxation, etc. The rest of it makes for a good cocktail party discussion of what ifs. There are a number of variations but let's consider a simple three party ...


2

When a security is illiquid, there is an absence of buy and sell orders and therefore the B/A spread tends to be much wider. If an order comes in with price improvement, the market maker or any trader may wish to remain the best bid or best asked. To do so, they utilize a pegged order which allows their limit order to self adjust, subject to a limit price. ...


1

Any decent broker will provide a size quote (volume) along with the NBBO price quote as seen in your link. However, there may be additional shares available if there are hidden orders at those prices (a hidden order masks the true size of an order). Getting a different fill price depends on several things. The most obvious is that if you're placing a ...


1

I would advice forward testing. Let's assume that your purchases and sales are not affecting the market. That is an error, but a concious one. It'll stay small for as long as you stay small. What you can do then is to simulate actually running the strategy. I'd be careful to not only randomly select days or periods to run a simulation, but to define market ...


1

This is a clumsy scam site. Someone who doesn't know what they're talking about threw together a bunch of terms in a way that doesn't make sense at all. For example, ask is the price that people are trying to sell at, and bid is the amount that people are trying to buy at - they reversed that. It makes no sense to talk about a price that's different than Bid ...


1

The site you're looking at is just a scam, ignore it and walk away Not that it matters, but on the site, their use of terminology is totally confused / ridiculous "Is it legal for..." the site you are looking at is an absurd, comic, scam. Issues such as legality are irrelevant. The site you're looking at is an absurd scam, ignore it and walk ...


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