# Between the bid and ask



## Naked shorts (16 April 2009)

Watching the T&S recently, and was wondering how a transaction can occur between the bid and ask?

Also how can transactions occur above the ask and below the bid


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## Naked shorts (16 April 2009)

It would seem logical that traders would execute their trades at the best avaliable price, not ripping themselves off by buying above the ask (and vise versa). Is this just a case of the trader lagging out and getting their order send through after the market has moved?

Regarding the trades between the bid/ask, is this a case of traders placing orders in between the bid/ask (not "at market" orders) at the exact same time?


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## Trembling Hand (16 April 2009)

If you are using IB its probably got more to do with their data than any other explanation.


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## Naked shorts (16 April 2009)

Trembling Hand said:


> If you are using IB its probably got more to do with their data than any other explanation.




Im using a barchart feed


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## jackson8 (16 April 2009)

Naked shorts said:


> It would seem logical that traders would execute their trades at the best avaliable price, not ripping themselves off by buying above the ask (and vise versa). Is this just a case of the trader lagging out and getting their order send through after the market has moved?
> 
> Regarding the trades between the bid/ask, is this a case of traders placing orders in between the bid/ask (not "at market" orders) at the exact same time?




hi naked shorts

in my options trading i have noticed the same kind of scenario , thats if i have read your post properly

as an example 
when i have sold a contract into a bid of 30c and my limit order is 30c i will always receive .305 or .310 its as if there is a buffer on the mms price

also on a spread of .300/.380 as a general rule if i choose the middle then add extra .005 so my limit price on this scenario would be  .335 it generally gets filled even though there is no bid at that price and the underlying has remained static.

i presume that most of the bid and ask quotes are from an automated system  so maybe if a bid or ask falls within a certain percentage of these prices the order will be filled

i remember reading an article a number of years ago from an american site which spoke of what was know as ghost bids.

hope this is relevant to your post.


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## MRC & Co (16 April 2009)

Can't crosses be executed this way?  

As for T&S, wouldn't bother about it, just watch the DOM and the order 'flow', these orders can't be ones placed which lag, as though they may not get their desired price, it will still have to hit the closest bid or ask.

But as TH says, this is prob more the data, and nothing you need to know to trade.


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## cutz (16 April 2009)

jackson8 said:


> as an example
> when i have sold a contract into a bid of 30c and my limit order is 30c i will always receive .305 or .310 its as if there is a buffer on the mms price
> hope this is relevant to your post.




Hi Gary,

I think the commsec options desk actually requests a quote if none are showing prior to authorizing your order, so they may actually tweek it if you are off the mark, although I’ve never confirmed this.

I had this happen to me when I was starting out, I entered an order but the series was not the one I was intending on selling (and I don’t recall seeing spreads) ,my order was way below market price, I rushed it through the trading password stage in the old protrader not checking the confirmation. 

The upshot was I got a fair price because I reckon the trading desk may have asked for quotes and adjusted my order, I didn’t ask them because I felt like a fool but i can't think of another explanation.


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## Naked shorts (24 April 2009)

Just got a zenfire feed. BIG difference. I didn't realise barchart was so crap 




MRC & Co said:


> As for T&S, wouldn't bother about it, just watch the DOM and the order 'flow', these orders can't be ones placed which lag, as though they may not get their desired price, it will still have to hit the closest bid or ask.




Got the DOM sitting next to it, I just didnt include it in the picture


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