Hi, I dont comletely understand these concepts. Could someone please explain in as much detail as possible? Why are they used? Under what circumstances they are used? Thanks, Splat
I think I just hurt myself trying to come up with a way to explain it. Seriously though, in a liquid market, you have a group of people that want to buy the item (whether it's a stock or a future or what). And you have another group of folks who'd like to sell it. If you put all these people together and they all list the prices they'd like to buy or sell, all the people who agree buy and sell, and you are left with a list of buyers (and their prices), and a list of sellers (and their prices). That is called an order book. The highest bid is sometimes called the best bid and the lowest offer is sometimes called the best offer. The two together are called the market, which has a bid and an offer. If you buy at the bid, you put your bid to buy into the market, and wait for somebody to come along and "hit" your bid (sell it to you). If you want to sell at the ask, you enter your order and wait for a buyer to come along.
The inside mkt is the highest bid/lowest offer displayed. Bid = highest price anybody is willing to pay for the issue Ask = lowest price anybody is willing to sell it to you
TM: Where in my question did I say I trade?? If you dont understand my question or dont have the decency to reply to the question - DONT. I've not been on elitetrader for a while but now I understand what the 'Stop the Crap' thread is about... maybe you should read it....
indahook/TGreeg : Thanks for your replies. So whats the difference between 'Buying at the bid' and 'Buying at the ask' ?
If you want to buy the bid you have to wait for someone else to accept your price and sell to you. If you buy the ask the roles are reversed.