I agree with Volume, Turok, and IndexTrader. But I will try a simple explanation anyhow, I hope.
Typically if you enter a limit order to buy at the bid on a slow moving stock, you would wait in line behind other purchasers who entered a buy at the bid order before you did. If the prices stay the same, your order would be filled only after the others in line ahead of you would be filled and ony if there was a willing seller at that price. The way to put yourself ahead of the other buyers is to raise your limit bid higher than the existing bidders and then you become the inside best bid, at least for a while until either your order is filled, or until someone bids higher than you and kicks you out of best bid position.
In a fast moving stock such as RIMM, there is usually unrelenting fast movement and change of both the best bid and best offer displayed on the level 2 window, as buyers and sellers constantly change and jocky their prices. At this point, with a fast moving stock you need to pay attention to the time and sales window to understand what is happening. If the price is moving up strong, typically you will have a majority of the prints being green, which means that a majority of the sales occur at the asking price. So your chances of getting filled would not be high with a specific limit order and as the prices move up and away from your original limit order price. One way to compensate with a fast moving stock is to chase the inside bid (not usually recommended) by constantly adjusting your bid, with no assurance that your bid will be taken at all by any seller. The only way to assure a fill is to place a market order which would go to the best available ask price at the time. The down side to the market order is that you pay the spread (buy at the ask), and the price may be moving so fast, that the price you end up paying will often times be higher than the price you originally expected to pay(called slippage)
The same logic and opposite conditions apply for selling to the bid when a stock is dropping fast and with a lot of red prints.
Typically if you enter a limit order to buy at the bid on a slow moving stock, you would wait in line behind other purchasers who entered a buy at the bid order before you did. If the prices stay the same, your order would be filled only after the others in line ahead of you would be filled and ony if there was a willing seller at that price. The way to put yourself ahead of the other buyers is to raise your limit bid higher than the existing bidders and then you become the inside best bid, at least for a while until either your order is filled, or until someone bids higher than you and kicks you out of best bid position.
In a fast moving stock such as RIMM, there is usually unrelenting fast movement and change of both the best bid and best offer displayed on the level 2 window, as buyers and sellers constantly change and jocky their prices. At this point, with a fast moving stock you need to pay attention to the time and sales window to understand what is happening. If the price is moving up strong, typically you will have a majority of the prints being green, which means that a majority of the sales occur at the asking price. So your chances of getting filled would not be high with a specific limit order and as the prices move up and away from your original limit order price. One way to compensate with a fast moving stock is to chase the inside bid (not usually recommended) by constantly adjusting your bid, with no assurance that your bid will be taken at all by any seller. The only way to assure a fill is to place a market order which would go to the best available ask price at the time. The down side to the market order is that you pay the spread (buy at the ask), and the price may be moving so fast, that the price you end up paying will often times be higher than the price you originally expected to pay(called slippage)
The same logic and opposite conditions apply for selling to the bid when a stock is dropping fast and with a lot of red prints.
