Stock Markets Exposed
What causes stock price movements? How are market or limit orders executed on an NYSE/nasdaq?
What causes the bid-ask spread prices go up and down? I believe it has something to do with the Limit Order book and the order of execution? Does anyone know how orders are filled to make the bid-ask spread to change? WHat causes the specialist to hold an inventory of stocks? If the investors don't provide liquidity thru limit orders, what will happen to the bid-ask spread?
Public Comments
- The bid-ask spread comes about naturally because buyers are only willing to bid a certain price which is typically lower than the lowest price a seller is willing to take. If there is an overlap a trade results. The spread "moves" up when buyers start bidding higher prices thereby eating up any sell volume. Similarly it'll go down if sellers come out of the woodwork and offer shares at a lower price than the current buy bids.
