Question on taking liquidity

Q

qwerty14

I have a strategy that trades some stocks around the open, but the bid-offer spreads sometimes are 20 cents wide.
What happens if I place an order at mid point? Example bid + 10 cents
Will the order rest on the book and shrink the spread? Will it get crossed against any of the hidden orders at that price?
 
It depends on the order type but assuming it's as vanilla order, it'll rest at that price and shrink the spread unless there's a hidden order already resting at that exchange at a crossing price.

Some order types (provide liquidity only, for example) wouldn't match against the resting order even if it existed.
 
I tried to do this in the past and I had three outcomes.

1. You get the fill at the mid point
2. The HFT algos instantly penny jump you and the best bid is now 1 tick higher that what you tried to buy at and you are at the back of the line again.
3. Nothing happens.

The penny jumping games happened a lot and drove me nuts.
 
Whoops, just posted a reply that was dumb because I thought it was a different thread; deleted that.

A 4th option, somewhat like _eug_'s 2nd but more frustrating is that someone's algo posts a bid/ask at the *same* price as you -- not even better -- but at a different exchange. Ugh. Using a broker with flexible order types, like IB and relative orders, you can be the penny jumper yourself though :)
 
qwerty14 said:
I have a strategy that trades some stocks around the open, but the bid-offer spreads sometimes are 20 cents wide.
What happens if I place an order at mid point? Example bid + 10 cents
Will the order rest on the book and shrink the spread? Will it get crossed against any of the hidden orders at that price?
More...

When you say around the open, Are you intentionally missing the opening rotation? Yes, your bid or offer after the open will be represented and narrow the spread, or get traded by a hidden order or a fresh order that comes in.
 
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