Bid Ask Spread Question?

E

ER9

Would I be correct if I assume that if there is a considerable spread between bid and ask that the likelyhood of a considerable advance in price would not be as favorable as a shorter spread since a greater spread requires more distance for bid price to cover before price can begin to advance?

If i'm trying to decide between a couple nice setups should I favor the one with a shorter spread assuming all other factors are similar?

Thanks
ER
 
Quote from ER9:

Would I be correct if I assume that if there is a considerable spread between bid and ask that the likelyhood of a considerable advance in price would not be as favorable as a shorter spread since a greater spread requires more distance for bid price to cover before price can begin to advance?

If i'm trying to decide between a couple nice setups should I favor the one with a shorter spread assuming all other factors are similar?

Thanks
ER
More...

You can still have a considerable advance in price with a wide spread (in fact, when markets are moving quickly their spread will naturally increase), it's just you will need a greater move to make the same amount of money because you are paying a greater spread
 
Quote from ER9:

Would I be correct if I assume that if there is a considerable spread between bid and ask that the likelyhood of a considerable advance in price would not be as favorable as a shorter spread since a greater spread requires more distance for bid price to cover before price can begin to advance?

If i'm trying to decide between a couple nice setups should I favor the one with a shorter spread assuming all other factors are similar?

Thanks
ER
More...

Actually, just the opposite. Wide spreads are the result of thin markets. Thin markets tend to move in HUGE hunks (when they move at all).

Jay
 
You wrote 79 words (not including Thanks ER) in two sentences without comma. I don't hold it against you. In fact I like the style. But you see the matter of fact is that whenever I wrote something like this they shrugged theirs shoulders and put away their hands.

Yes, what you said about bid and ask is correct if I understand you correctly.

Quote from ER9:

Would I be correct if I assume that if there is a considerable spread between bid and ask that the likelyhood of a considerable advance in price would not be as favorable as a shorter spread since a greater spread requires more distance for bid price to cover before price can begin to advance?

If i'm trying to decide between a couple nice setups should I favor the one with a shorter spread assuming all other factors are similar?

Thanks
ER
More...
 
You wrote 79 words (not including Thanks ER) in two sentences without comma. I don't hold it against you. In fact I like the style. But you see the matter of fact is that whenever I wrote something like this they shrugged theirs shoulders and put away their hands.
More...

LOL....well I just wanted to get everything out before I forgot. ;]

Actually, just the opposite. Wide spreads are the result of thin markets. Thin markets tend to move in HUGE hunks (when they move at all).
More...

Thin meaning low volume, low volatility?

Thanks
ER
 
Thin meaning low vol. It can still be very volatile.

Example: something like coffee vs emini spoo (ES). Coffee is a thin market relatively speaking, and can have a wide spread at times, especially when its moving big!

ES can be extremely volatile yet almost always has a single tic spread during the day session. There are few exceptions to this (only when serious shit hits the fan, and this only lasts for maybe a minute max, at which time prices are changing so fast that the spead is irrelevant anyway).

Its usually liquidity that determines a spread, unless a market is really hauling someplace, and then a wider spread indicates movement.

Jay
 
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