OC, California, USA
Quantoholic
Experience: Advanced
Platform: IB/TWS, NinjaTrader, ToS
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Trading: stocks, options, futures, VIX
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It means the bid/ask can move up and/or down in 0.01 increments. It's not a guarantee that the spread will only be 0.01 wide. It's not necessarily an indicator of increased liquidity, but since it increases price efficiency it will help promote increased liquidity than if it were still trading at 0.05 increments.
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