I'm pretty sure this is a big no no, but it'd be great if someone could explain to me why this is a big no no. 50.01 x 50.25 ---> quite a large spread. Say you are long and you wanna get out. You don't want to sell at market and get 50.01, but say you don't wanna park @ 50.25 because you are not likely to get filled cause you'll be @ the end of the line. So why not place a sell limit order @ 50.24, and be first in line to be filled I've hear you should never do this, but I dont know why?
??? if you own the stock ..you can offer whatever price you desire .. limit .24 ?? go ahead ?? whats the prob??
I don't like doing this. What I find is that if you do get hit, most likely the offer at $50.25 will be taken out as well. I always place limit sell orders above the current ask. But then again, I am a swing trader.
I do this on Ice all the time in the OTC markets. Minimum tick is .05 (multiplier is 800, so $40). People typically bid in quarters. They get pissed if you come in and "nickel" them. But hell, $40 to cut in line is money well spent.
I'm guessing you're trading as part of a group? If so, the reason they've told you not to do that is probably because that offer at .25 is your neighbor and they don't want you jumping in front of them. Especially if you are trading together and sharing ideas, you don't want to be cutting each other's throat. Whether it's your neighbor or not, this happens all of the time. Someone is on the offer at .25, someone jumps ahead to .24, then .23, etc., sometimes all the way down until the bid starts getting hit. Certainly not a big no no, but it doesn't always work in your favor. It could be a no no if your buddy who called out the trade for you is the one you're cutting in front of.