Can someone give brief explanation of a locked and crossed market? If I hit an ECN either on the bid or ask is that then a locked market because my bid == ask or my ask = bid? Confused? Thx mktman
a crossed market is a market where the best bid is higher than the best ask.. a locked market is where the bid and ask are equal.. you wont cross the market by hitting an ecn at the best bid/ask.. you can cross the market by posting a bid/ask that is greater/less than the current market.. if you are new to trading its best to use your brokers auto route feature or an ecn like redi or arca that will prevent you from accidentally going outside the market.. -qwik
ISLD and INCA -the other 2 ECNs that most DAT platforms give the ability to post bids and offers-will allow you to enter orders that lock or cross the market. However they will adjust the price for display purposes so as not to appear that the order is locking/crossing the market.
In your specific example you would not be locking the market because your order would execute against that ECN. If size is available on an ECN you can directly route to that ECN and get filled, no matter if you are bidding higher than the best ask, etc.