Buy ask/Sell bid - Isn't that just a market order? | Traders Hideout


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Buy ask/Sell bid - Isn't that just a market order?

  #6 (permalink)

charlotte nc
 
Trading Experience: Master
Platform: ninjatrader
Broker/Data: NinjaTrader
Favorite Futures: Emini (ES, YM, NQ, ect.)
 
Posts: 379 since Jan 2015
Thanks: 69 given, 919 received

What you are referring to is known I believe as a marketable limit order.
You are asking to be filled across the bid / ask spread at a specified price.

So instead of joining the limit order queue to try to capture the spread, you are joining the market order queue against the spread. As long as there isn't a long line of market orders in front of you that could potentially knock out the whole level, you should get filled. But If you are number 100 in a line and there are only 50 limit orders holding up that price level, then by the time your number gets called, the new bid / ask level will have changed and you will miss your fill because you have protected yourself by specifying a price to fill, or else you are not interested.

A standard market order will take any price, but since you are specifying your entry price you can protected your self. The con's obviously would be the times where the market moves too fast, the price level changes, and you miss your fill.

So the 3 options again are:

1. Limit order: Define the price, capture the spread, but you can miss fills
2. Market order: You will get filled, but you can't pick the price
3. Marketable Limit Order: You lose the spread, but you define the price, you can still miss fills, but this will occur less often than with limit orders.

Hope this helps.

Ian



Revan View Post
Hi all,

The trade box window in Sierra Chart has the following buttons..

Buy Mkt
"Buy Ask" - (Limit order)
Buy Bid

Sell Mkt
Sell Ask
"Sell Bid" - (Limit order)



What's the deal/thought process with this.. isn't that just a market order, apparently it is a limit order.. why..


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