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It Went Bid... It Went Offer... Meaning?


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It Went Bid... It Went Offer... Meaning?

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  #1 (permalink)
 BA 21 
Southern MD
 
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After five years of trading futures, I am embarrassed to ask what do the following phrases mean?

"The price went bid..."

"The price went offer..."

This still confuses me.

I'm assuming that when the price goes bid, it increases. And conversely, when the price goes offer, it decreases.

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 josh 
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BA 21 View Post
After five years of trading futures, I am embarrassed to ask what do the following phrases mean?

"The price went bid..."

"The price went offer..."

This still confuses me.

I'm assuming that when the price goes bid, it increases. And conversely, when the price goes offer, it decreases.

Nothing to be embarrassed about. Many people think they know, never ask, and never learn. Kudos.

Let's say the market is trading 4229.50 x 4229.75:



Sellers hit the bid at 4229.50. If they sell enough to fill all buy orders there, or if the orders there cancel so that there are no orders remaining, then there will be no bids to buy 29.50. Typically what happens is, let's say there are 40 contracts bid--then someone hits that bid with a sell limit at 29.50, for 100 contracts. The 40 are filled, and now there are 60 offered (the remaining unfilled part of the 100 lot sell) at 29.50. At this point we can say "29.50 went offer".



So let's say you want to get short. 29.50 is bid, and is being hit, hit some more, hit some more, and then goes offer (as explained above). What you'd really like to see is 29.50 hold that offer. In other words, you'd prefer that 29.50 not go bid again. If sellers hit and hit and hit and now are holding the offer, if they relinquish it, then there are potentially quite a few shorts now offside (they are short 29.50, but can now only buy 29.75 or higher at a loss, to get out of their position). If the bid now gets stepped up, these shorts may scramble to cover, driving the market higher.

One of the more juicy things to observe is when the market starts to get energy and push higher, and you see sellers take all bids at the price, you see the price briefly with no orders or offered for a few, and it's quickly rebid. It repeats several times -- active sellers, with bidders taking all they can. I call it a "rebid" (stolen from a prop trader I worked with years ago). I'm not referring to a bona fide iceberg, but it's nonetheless similar in that it's an active providing of liquidity. When you see a persistent re-bid, it's a good thing (to be long).

This is a simplified example, and in a loose, fast market like ES currently is, a tick is not quite so important as seeing an "area" hold the bid or offer. But the above is the mechanics you want to know, I think.

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 BA 21 
Southern MD
 
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Thanks for this. I am going to have to read it a couple of times as I neither trade off the DOM frequently or intraday.

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 SMCJB 
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While @josh explanation is a good one, the expressions "Went Bid" and "Went Offered" are really old "floor trader speak" and while still used today they often have a more generic meaning than they used to.

Back in the days of the pits you would be on the phone with a broker on the floor, he would be quoting a market, say 50/60, 50/60 and then he may say, "goes bid" which as @josh explained, would mean that somebody bought all the 60s and is now 60 bid looking for the offer. So the quoting would probably go something like
"50/60"
"50/60"
Goes Bid.
now "60/70"
probably with some color like
"Goldman bought all the 60s. About 100 traded looks like they bidding for 100 more"

Today it more generically just means the market is well bid and the market is (generally/probably) going up!

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