Hi , Apologies if this has been asked before but was wondering something about LMT orders. I see many times someone is " Buying the Ask" or Selling the bid. Now normally I know you buy the bid and sell the ask. What is the benefit or reason why someone would want to buy the ask or sell the bid?
'Buy the Ask' will have your order placed as a limit order for the current Ask price. If you use Buy Market' there is a chance that you will pay more than the current Ask if price is moving quickly.
I don't see this addressed much... But everybody would like to "buy the bid" and "sell the ask", but in reality it works the other way. When you place a limit order to buy, you don't (usually?) get filled until your bid has become the market's ask... so you're not really "buying the bid". IWO... you're always "paying the spread, one way or another".... hopefully the spread is small. Somebody please correct me if wrong.
I think that's pretty much always true if the broker sells their order flow, and often the case with smart routed orders as well. If I direct the order myself I can often get a fill that isn't just adverse selection, though it depends on a lot of factors.
I usee to buy the bid, could see my order waiting on L2 to get filled, used to get partial fills, used to not get filled at all, gave up easier and quicker to just go market order.
%% Well you can do better than that if you use a sim.... LOL. And on exit, hopefully the spread is small.And also ,maybe not the best way to put it but i do- if todays today close price is higher[than yesterdays]; i name that daily buy volume. A lower close to close price =sell volume.[No confusion intended to market makers or anyone else-disclosure]