| |
| |
|
Investing Information |
|
|
|
Success Trading for New Traders: What Does Bid and Ask Mean?
Do you ever wonder exactly what's going on in the trading pits after you've sent an order to purchase stock? You've no doubt seen market quotes either online or even in the newspaper. Have you noticed that there are always two sets of prices given? What exactly do those mean and where will my order get filled? Let's discuss the basics of the two prices you see. Let's say you're trading stocks. The first price (usually the one on the left) is called a "bid". This is the price at which the market is offering to buy the stock. If you sell your stock at the market, this is the price that you'll get. The second price (usually located on the right) is called the "ask". This is the price at which the market will sell you the stock. If you submit an open order to buy shares at the market, you will get them for the ask price. Another element that comes into play sometimes is the size of the bid and ask. Usually, there's an order size that comes with the bid and ask. If that size is exceeded then the price will usually change - and generally, that small price change will move slightly against you since you're creating a demand for that stock. The difference between the bid price and the ask price is called the "spread". If you look at the spread of a large cap stock that trades over a million shares a day, and compare that to a small cap stock that only trades a thousand shares a day, you'll see a huge difference. Stocks that are more liquid (or more activity) will have much smaller spreads than those with less activity. Thus, you will get a better fill (or deal) for a market order on a more liquid stock. One tool you can use to possibly improve your price is to use limit orders. If you want to buy XYZ at no more than $12 and the bid is $11.50 and the ask is $12.50, you can place a purchase order with a limit of $12. This means that the order won't be filled unless you can get it for $12 or better. One word of caution with limit orders is that the market could run away without you if used with a buy order. And if your order is filled, you'll be buying the stock on a downtick, which means it could be making a major move down. As a general rule, it's not a good idea to use limit orders when selling stocks as the market could make a big move against you without ever hitting your limit price and you'd be stuck with a big loss. Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trading-stocks.htm
MORE RESOURCES:
Investing - Google News |
|
|
|
RELATED ARTICLES
Raising Capital Using a Public Company Going public in this manner is ideal for companies that may not be large enough to attract an underwriter for an IPO and those that don't need to raise capital immediately. They want to go public because of the many benefits that being a public company offers such as increased valuation, using public stock as currency to acquire other companies and assets, liquidity, prestige and to reduce the need for expensive venture capital and other financing sources. The Truth About Real Estate Investing - Is It Right For You? You have probably been hearing, seeing and reading that real estate investing is the best thing since sliced bread. There are many late night cable television infomercials spewing out sales pitches for courses that teach you how to buy residential real estate no money down or for next to nothing. The Three Legged Stool My paternal grandparents were born near Lake Como, Italy. My grandfather learned how to farm, and he did just that until he died chopping wood at age 88. Will a Falling Dollar Derail Your Plans for Retirement? How much are you willing to pay for a tank of gas? We've all watched as gas prices hit record highs, but what would you do if you filled your tank and paid by credit card only to discover on your monthly statement that you paid $80 to fill an economy car. No, this is not some future doomsday projection of oil prices. Mutual Fund Returns May Not Be As They Seem! Arthur Levitt, during his tenure at the SEC, experienced many cases where the non-indexed mutual fund manager bought shares for their own accounts before the fund bought the shares. The fund's purchases drove up the price of the stocks and the fund manager's made a killing on the deal. Trading Is Not Rocket Science! Despite what some people may lead you to believe; day trading, swing trading and trend trading is not anywhere as difficult as they would like you to think. It really boils down to two key components. Building The Foundation For Wealth You wouldn't build your home on anything less than a solid foundation. Similarly, you can't build wealth and financial independence without first having sound foundational principles to build upon. Buying Florida Investment Properties and Where Its Hot Relaxing in Style: Florida Investment PropertiesIn Florida, relaxing in the sun and sand is a way of life. There's no better way to experience a slice of Florida living than buying your own space. Are You An Investment Dummy Like Me? I am good at a few things. I can certainly market well and I consult with others about how to bring more attention to their products and services on the internet for a living. Sell Discipline for Investors: Importance and Execution Investors usually don't have an aversion to buying an asset. The real gut wrenching decision is when - and if - to sell. Invisible Mutual Fund Fees Erode Your Returns! Many investors think that investing in mutual funds is free. What nonsense! Funds collect more than $50 billion a year in fees from investors. How to Invest Your Money Think carefully on how to invest your money because if you make wrong decisions it could cost you dearly. There are many ways in which to invest your money and as such seeking the advice of a professional would be a very wise move. Seecrets on Investment: Tired of Making Huge Losses in the Stock Market - Part 1 Over 80% of all individual investors lose money in any given span of ten years. This figure is likely to be higher, given most people's reluctance to reveal their losses. The 8 Biggest Mistakes When Designing Portfolios - and How To Avoid Them Are you as good an investor as you think? Do you consider yourself a well-informed investor able to anticipate and avoid nearly all pitfalls associated with investing? Chances are, you are making one of the common errors that could cost you hundreds or even thousands of dollars, or worse yet, your financial independence, control and security."I see people making the same costly mistakes over and over," says Scott Frush, CERTIFIED FINANCIAL PLANNER and author of Optimal Investing: How To Protect and Grow Your Wealth With Asset Allocation (Marshall Rand Publishing; available by calling 1-800-247-6553). July 2005: Hurricane Forecasts for Weather Traders Tropical Storm Arlene formed as a tropical depression on June 8, 2005 near 83 West Longitude and 17 North Latitude. Although Dr. The Difference Between Investing and Trading Investing and Trading are not the same thing. The returns you seek, the length of time it takes to achieve those returns, the amount of risk one is prepared to take, and the commitment one can make to monitor the investments dictate the strategy of whether to invest or trade. Find Your Investing Soulmate on the Jersey Turnpike As a followup to a previous column, "Irreconcilable Differences," I received an e-mail from a reader asking how she could ensure, ahead of time, investment compatibility with a future spouse.Unfortunately, like most issues in life, the direct approach does not work. How To Find An Investment Advisor Do you think you need an Investment Advisor? Hold on before you answer because this is sort of a trick question. Also, I am definitely biased because I am an Investment Advisor. Investor Guide to Financial Health Step 1: Spend less than you earnPerhaps the simplest financial concept is the toughest for us to conquer- spend less than you earn. After paying your living expenses (bills, loan and mortgage payments, cost of food, charitable contributions, taxes, etc), you can begin to save and invest toward your future. Investing In Sons Business Could Cause A Real Family Feud Q: My youngest son wants to borrow $5,000 to start his own business. My wife is afraid to tell him no.
|
| home | site map |
| © 2006 |
