bid/ask dilemma

C

cashclay

Can someone explain this?
So for example the Bid is at 3$ and the ask is at 4$
If Im the seller of the stock and want to sell at 3$, it usually get filled rahter quickly at 3$. However if i want to buy the stock why do i have to buy it 4$ when i can sell it at 3$ and get filled??? If i get filled at 3$ doesnt that mean that buyers are buying my sell price at 3$?
 
Because when you sell at 3 when the ask is at 4, you become the best ask and get filled nearly immediately. If you try buying at 3 when the ask is four..you go to the back of the line
 
now if you trade spot fx with ib, I am willing to sell the bid at 3 and you are willing to buy the ask at 4, we both may just get matched up at "price improvement." That's why we like tight spreads.
 
Its called "taking the offer" or "hitting the bid". If you are a buyer and want an immediate fill, you "take the offer" at $4. If you want sell immediately, you can "hit the bid" at $3. Of course you can also "Offer" to sell at $4 or "bid" to buy at $3. Unless the stock is really moving, you likely won't get an immediate fill since others are queued in front of you. You can also bid above $3 and offer below $4 in the hopes of being the first to get filled.
 
How does this logic work? I can sell at 3$ but buy at 4$. Then who might i ask is buying it at 3$? there has to be a buyer at 3$ for it to be filled instantly. And so who is that and why cant i do that ask well? thats the crux of my question
 
cashclay said:
How does this logic work? I can sell at 3$ but buy at 4$. Then who might i ask is buying it at 3$? there has to be a buyer at 3$ for it to be filled instantly. And so who is that and why cant i do that ask well? thats the crux of my question
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easy peasy, you simply put in a limit to buy at 3 and stand at the end of the line until you get filled at 3. But by then the ask may be 3.
 
i dont think my question is being fully understood. If there is always someone to buy at the bid price of 3$ which on my part is being instantly filled, why then cant i buy at 3$. Why do i have to buy at 4$??Obviously for the people selling which they can only sell at 3$ for it to be filled instantly means that someone at 3$ is buying. Who are these people buying and why cant i be one of them?
 
If you have a decent paper account like ib offers, simply set up your preconfigured presets to "buy limit bid" (it will be automatically reversed for sell to "sell limit ask") and enter both a buy and a sell simultaneously and you will see how the spread goes.

and if you want to be the scalper, try bid minus 1
 
cashclay said:
i dont think my question is being fully understood. If there is always someone to buy at the bid price of 3$ which on my part is being instantly filled, why then cant i buy at 3$. Why do i have to buy at 4$??Obviously for the people selling which they can only sell at 3$ for it to be filled instantly means that someone at 3$ is buying. Who are these people buying and why cant i be one of them?
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If you want to get filled at 3 so bad, just enter a limit to buy at 3. Otherwise you have to pay the spread and buy at the market at 4 if you want to get filled so bad right now.
 
If you are asking where the money goes? Try buying the bid at a limit at 3 and selling the current spread at 4. Whichever one gets filled first will make you naked long or short, and the spread is the reward for the risk you take. Remember, those lines you have to stand in to get filled can be very long at times. The money just doesn't disappear. It goes to the trader who accepts the risk (with a little vig to the broker.)
 
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