Bid higher than Ask. Why?

T

tradebanzai

Hi everybody!

Can anyone explain to me why sometimes Bid becomes grater than Ask? How it could happen? I can see that it T&S screen.
Thanks
 
Its simple. Its called crossed market when someone is bidding higher than the inside offer or viceversa. It happens every now and then specially in fast moving markets. It usually is momentaneous and clears within seconds, but if you can hit the arbitrage do it and cover on the offer for a nice freebie profit.
 
Quote from skulltrader:

Its simple. Its called crossed market when someone is bidding higher than the inside offer or viceversa. It happens every now and then specially in fast moving markets. It usually is momentaneous and clears within seconds, but if you can hit the arbitrage do it and cover on the offer for a nice freebie profit.
More...

Agree...

It could also be data vendor problems (bid and ask quotes out of sync) and there's no crossed market especially during a fast moving market.

I've seen such several times when comparing two different data vendors side by side...

One keeps up with the quotes during a fast moving market while the other looks like its a crossed market.

Mark
 
"Its called crossed market when someone is bidding higher than the inside offer or viceversa."
Why? What's the purpose of bidding higher than the offer?

"None of the posts mentions a financial instrument. What market are we talking about?"
I'm talking about stocks.

"None of the posts mentions time of day either. Regular market hours? Or pre/post market?"
The last time I remember was around 14.30 yesterday. And as I noticed it usually happens when there're lots of shares traded, the market can even stand still or move in narrow boundaries.
 
OK guys, here's a look at "Bright Trading 101" - when we want quick executions on the NYSe, we submit bids higher than the offer ....why you ask?...simple, because the assistant specialist can simply click a "fill" at the best current price, giving us almost immediate gratification...and, if were to use market orders, the Specialist himself (herself) has to determine the price, which may take a while for him/her to batch the orders.

So, very simply, we want quicker executions, often with price improvement. You will see those order for a few seconds on the L2 or NYOB at times. Works on ECN's too.

Don
 
Quote from Don Bright:

OK guys, here's a look at "Bright Trading 101" - when we want quick executions on the NYSe, we submit bids higher than the offer ....why you ask?...simple, because the assistant specialist can simply click a "fill" at the best current price, giving us almost immediate gratification...and, if were to use market orders, the Specialist himself (herself) has to determine the price, which may take a while for him/her to batch the orders.

So, very simply, we want quicker executions, often with price improvement. You will see those order for a few seconds on the L2 or NYOB at times. Works on ECN's too.

Don
More...

Thanks for your answer in my similar thread Don.

For anyone who's interested: I found an academic paper on crossed/locked markets that has a thorough statistical analysis of arbitrage opportunities.

http://www.nuff.ox.ac.uk/users/murphya/Arbitrage Opportunities in Nasdaq Stocks.pdf
 
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