Bid >= Ask for a few minutes, why ?

Discussion in 'Trading' started by tzheng, Aug 27, 2003.

  1. tzheng

    tzheng

    I think everyone has experience with this phenomenon - sometimes the best BID is greater or equal to the best ASK, what is happening in this situation ?
     
  2. I know sometimes in nyse issues the specialist will stop trading in the stock while he gathers orders from the crowd. When he does this he'll show 1x1 size on the offer, meaning he's basically turned off automatic fills and the stock is frozen. In the meantime though, the stock can still trade on ecn's and the bids and offers can move all over the place as people try to guess where the specialist is going to move his market to. So the market is crossed, but the prices shown on nyse don't mean much since you can't get a fill there.

    That's the most common thing I see, but I mostly only trade listed stocks.
     
  3. newtoet

    newtoet

    In my experience (on NAZ at least), it is when the ECN's get carried away and start bidding up the price. Happens on the opposite side too (ASK drops below BID).
     
  4. tzheng

    tzheng

    Thank you, lestor and newtoet.