How can a "bid" become current price?

[billyjoe]

I recently placed a limit order to buy a thinly traded stock at 14.15. Price at the time of order was 14.10. Ask was 14.20. I kept checking my order and price jumped to 14.15 although no shares were traded. Ask remained at 14.20. This seems fishy to me.

---------------billy

[mimo_100]

I recently placed a limit order to buy a thinly traded stock at 14.15. Price at the time of order was 14.10. Ask was 14.20. I kept checking my order and price jumped to 14.15 although no shares were traded. Ask remained at 14.20. This seems fishy to me.

---------------billy

The bid price at the time of your order was 14.10. There could have been a specialiast on the exchange that held that order at 14.10. One of the specialists duties is to maintain a market. So he/she could have cancelled their buy order and replaced it with yours. If you would have entered your order at 14.20, I am pretty sure your order would have filled at 14.20.

Here is a pretty confusing explanation from Zacks.

Stocks are quoted "bid" and "ask" rates. Bid is the highest price at which you can sell; ask is the lowest price at which you can buy. For example, if XYZ is quoted $37.25 bid, $37.40 ask: the highest price at which you can sell is $37.25; the lowest price at which you can buy is $37.40. When a trade takes place on the bid, somebody is selling; when it takes place on the ask – somebody is buying.

Volume
Volume is the number of shares traded. Multiplied by the current stock price, it tells you a transaction's dollar amount. The higher the volume, the more important the action is because it shows you how much money changes hands at a specific price level. For example, if eight 100-share XYZ trades are reported on the bid – at $37.25 and two 1,000-share XYZ trades are reported on the ask – at $37.40, the total bid volume was 800 shares, and the total ask volume was 2,000 shares.
Trading Psychology

Traders always want to get a better price: Instead of accepting the current bid and ask, they may try to sell a little higher or buy a little lower. In an orderly market, you may see trades reported between the current bid and ask; for example, $37.28 or $37.35. But when traders are anxious to buy or sell, they are willing to accept whatever prices they can get, so when you see trades being reported on the bid or on the ask, you know the price is likely to move..

http://finance.zacks.com/can-tell-direction-stock-price-looking-bid-vs-ask-volume-2758.html

[riverbabe]

I recently placed a limit order to buy a thinly traded stock at 14.15. Price at the time of order was 14.10. Ask was 14.20. I kept checking my order and price jumped to 14.15 although no shares were traded. Ask remained at 14.20. This seems fishy to me.

---------------billy

Easy. It's HFTs at work, front-running your order. Read Flash Boys.

[mimo_100]

Easy. It's HFTs at work, front-running your order. Read Flash Boys.

please explain

[riverbabe]

please explain

HFTs not only front-run an ordinary investor like you, me and Billy by having a faster computer algo fiber optic cable network that picks up buy or sell orders (when you hit the send button) milliseconds, microseconds, nanoseconds before they reach any of the other 42 or so exchanges. They buy up/sell the shares at the lower/higher price registered on the slower exchanges and exploit the price differences between the slower exchanges and theirs to raise/lower the bid-ask quotes according to the new quotes they have received faster. It also depends on which exchange your broker routes your order to - that is, how fast it gets to the exchange. HFTs also work within "dark pools" that operate at most of the banks and brokerages that have traders. The dark pool trades are buys and sells of shares of large buyers and sellers, and these trades never see the light of day. That's probably why Billy didn't see any shares traded, and yet the bid price went up. (I unwittingly bot shares from the dark pool of my then brokerage because I was offered a lower-than-market price).

I know this is all as clear as mud, but it is the new stock market! Almost no human intervention, all kind of kickbacks, fees, payments and favors to get the best possible outcomes for the HFT intermediators, certainly not we individuals. We are getting screwed. Billions of $$$ being made due to the HFTs. The new IEX exchange takes the moral high ground by trying to foil most of the schemes of the HFTs.

[billyjoe]

River, And the IEX founder had a hell of a time getting approved. The fight went on for years. The good news is I finally got my order filled at my price.

-------------billy

[riverbabe]

River, And the IEX founder had a hell of a time getting approved. The fight went on for years. The good news is I finally got my order filled at my price.

-------------billy

Hooray to Billy! Patience is a virtue, eh?