Hypothetical situation about orders

[jzamoras]

Hi All, I have a question about orders. Let's say I put a buy limit order @ 100 and someone put a limit sell order @ 95. What is the transaction price?

Thanks in advance,
Jaime

 

[jsmooth]

why would someone offer below the bid? people dont just give money away like that.

 

[jzamoras]

Quote from jsmooth:

why would someone offer below the bid? people dont just give money away like that.

The question is about how the exchange will clear the transaction. Will it split in half the differences? It will be clear at bid price?

Best,
Jaime

 

[The Kin2]

It would be 100, assuming both orders are the same size.

 

[jzamoras]

Thanks Kin2, can you elaborate? Why it will be 100?

Best,
Jaime

 

[jzamoras]

I asked to IB help desk and they told me it will be cleared @ 95 (same size order). It doesn't make sense to me.