Comments on: Tips for using Bid-Ask Spreads http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/ Learning and sharing investment knowledge. Sat, 31 Jul 2010 22:34:59 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Chris http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-3262 Chris Mon, 14 Aug 2006 12:26:45 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-3262 Excellent. Thanks for all your great info, Christian and Mike. Excellent. Thanks for all your great info, Christian and Mike.

]]> By: Christian Gross http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-3253 Christian Gross Mon, 14 Aug 2006 09:28:14 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-3253 You need a broker who supports it. If your broker does support it, then you can enter what you would like to show up. There are other tricks that brokers can play: 1) Hidden so that you order does not show up in the books at all 2) Scaled so that your order shows a decreasing amount. Eg let's say that you want to buy at 10.20, but to show the negative you create a series of orders at 10.20, 10.19, 10.18, etc. Thus it seems like there are number of low priced orders, when in fact you are more than willing to pay 10.20. 3) Iceberg which only shows a percentage. As was commented. There are so many tricks that professional traders play with the books that I would not rely on the bid ask price spread. I personally don't play these tricks because, well, I don't play in those share count levels 5000> per order. And what should be noted here is that it is the big players that actually move the market that are playing these tricks. You need a broker who supports it. If your broker does support it, then you can enter what you would like to show up.

There are other tricks that brokers can play:

1) Hidden so that you order does not show up in the books at all
2) Scaled so that your order shows a decreasing amount. Eg let’s say that you want to buy at 10.20, but to show the negative you create a series of orders at 10.20, 10.19, 10.18, etc. Thus it seems like there are number of low priced orders, when in fact you are more than willing to pay 10.20.
3) Iceberg which only shows a percentage.

As was commented. There are so many tricks that professional traders play with the books that I would not rely on the bid ask price spread.

I personally don’t play these tricks because, well, I don’t play in those share count levels 5000> per order. And what should be noted here is that it is the big players that actually move the market that are playing these tricks.

]]> By: Journey To Financial Freedom » Blog Archive » Carnival of Investing #35 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-3231 Journey To Financial Freedom » Blog Archive » Carnival of Investing #35 Sun, 13 Aug 2006 23:54:41 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-3231 [...] Tips For Using Bid-Ask Spreads, from Chris Welch of InvestorGeeks and he dives into bid/ask spreads and learns how to use them to your advantage. [...] [...] Tips For Using Bid-Ask Spreads, from Chris Welch of InvestorGeeks and he dives into bid/ask spreads and learns how to use them to your advantage. [...]

]]> By: Chris http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-3201 Chris Sun, 13 Aug 2006 13:21:57 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-3201 How are the bid/ask volumes worked like that? Is there some place you can enter in the volume you'd like to show up? How are the bid/ask volumes worked like that? Is there some place you can enter in the volume you’d like to show up?

]]> By: Michael http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-3131 Michael Fri, 11 Aug 2006 19:34:18 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-3131 I have to agree with Christian. There are a LOT of games people play with bid/ask and Level 2. Don't really expect people to show their true hands in the order book! Unless you're a scalper I wouldn't even bother trying to game the spread. I have to agree with Christian. There are a LOT of games people play with bid/ask and Level 2. Don’t really expect people to show their true hands in the order book! Unless you’re a scalper I wouldn’t even bother trying to game the spread.

]]> By: Christian Gross http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-3093 Christian Gross Thu, 10 Aug 2006 14:35:17 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-3093 Sounds nice, but it's flawed and I would not use it. I know for a fact that my broker has something called iceberg orders. Essentially what that means is that when I submit my order only a percentage of my order shows up on the bid ask tables. However, when my execution goes through the entire "iceberg" is recorded. So I could submit an order of 10000 shares, but have only 100 show up on the bid-ask table. I asked about this with my broker and they said it is common to use and only the volume is 100% correct and cannot be "tricked". Sounds nice, but it’s flawed and I would not use it. I know for a fact that my broker has something called iceberg orders. Essentially what that means is that when I submit my order only a percentage of my order shows up on the bid ask tables. However, when my execution goes through the entire “iceberg” is recorded. So I could submit an order of 10000 shares, but have only 100 show up on the bid-ask table.

I asked about this with my broker and they said it is common to use and only the volume is 100% correct and cannot be “tricked”.

]]> By: Mmm... Life... http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/comment-page-1/#comment-2999 Mmm... Life... Wed, 09 Aug 2006 11:12:50 +0000 http://www.investorgeeks.com/articles/2006/08/08/tips-for-using-bid-ask-spreads/#comment-2999 Great blog. People often neglect the importance of the bid ask spread when trading in and out of positions that are less liquid. Though most stocks people look at tend to have a tight bid ask spread, the spreads on less liquid instruments (like options or smaller volume stocks) tends to take a fair bite out of your profit potential. http://mmmlife.com/2006/08/puts-and-calls-a-basic-options-primer/ Great blog. People often neglect the importance of the bid ask spread when trading in and out of positions that are less liquid. Though most stocks people look at tend to have a tight bid ask spread, the spreads on less liquid instruments (like options or smaller volume stocks) tends to take a fair bite out of your profit potential.

http://mmmlife.com/2006/08/puts-and-calls-a-basic-options-primer/

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