New trader - trying to understand market makers

Discussion in 'Educational Resources' started by mdennis83, Feb 16, 2009.

  1. mdennis83


    I've been reading articles and websites, mainly investopedia in regards to how the bid-ask spread works and placing limit orders. I understand that you buy at the ask, sell at the bid, and the maker gets the spread for taking risk. But, When I put order into buy an option @ a limit, then, my limit would become the bid. However, my broker says I buy at the ask. If my bid is posting, and someone comes in to put a market sell order, wouldn't I get executed @ the bid? How would I only buy at the ask, if I'm a posted bid? Maybe I'm totally missing something.

    Any help is appreciated

  2. 1) Your order, in all likelihood, will be filled when the market is "turning".
    2) The market can be "6 bid, at 7". Your buy order will get filled when the market is "turning" from "6 bid" to "at 6". The market now is "5 bid, at 6". You were filled at your price but the market has also traded through you for the time being.
    3) Occasionally, you may get filled and have the market sit still. :cool: