Very Strange

[LonnieTheKingpin]

Hello all:

This morning I've seen quite a few bids for BAC that were well over the ask. (For example: Last $11.44 Ask: $11.45 Bid: $11.56). As I've said, it happened many times -- too many to seem like an anomaly. In each of these cases, the price moved up or down by .01 (in other words, it never jumped to the bid). How/why does this happen? Does it mean anything, or is it just a bunch of market orders? If so, why didn't the price jump?

Thanks

[Stocktrading101]

Was it pre-market, ie before 9:30 AM? If so your explanation is that the market wasnt open so you were watching pre-market trading which has much larger spreads than normal trading hours. All trading during pre-market hours must be done via limit order.

[LonnieTheKingpin]

Hi Blain,

Thanks for the reply. Actually, the trading I mentioned was during normal hours. In fact, I'm seeing it again today. BAC

Last Prince: 10.95
Bid: 10.94 x53,600
Ask: 10.89 x28,000

It seems to have been happening throughtout the day yesterday and more than a few times today.

[Stocktrading101]

Last Prince: 10.95
Bid: 10.94 x53,600
Ask: 10.89 x28,000

In this example then that is fairly normal. What someone is doing is bidding below the last price to get 28,000 their shares sold quickly. In fact for most brokers if you place a limit sell limit order below the bid then it is automatically filled at the best price available.

The last price in comparison to the ask though could also be pulled from difference exchanges and not completely in sync. IE exchange A could see last at $10.95 whereas exchange B saw it at $10.88.

Bottom line it is pretty normal and when that happens what you should see is the stock then next be traded at $10.89 then bounce back up to $10.94 and $10.95.

[LonnieTheKingpin]

Thanks again Blain.

Not only does that make perfect sense, but I've also done it myself on more than a few occasions when one of my holdings was sinking and picking up speed. If you don't have a stop in place and want to maximize the chances that you sell within a reasonable range without placing a market order, this is the way to go.

If I thought it through, I would have also (quickly) realized that I wasn't seeing every exchange when I was monitoring the last price.

I'm glad that "No question is a bad question" in the Stock Questions Forum.

Thanks again for taking the time to clear my head.

[Stocktrading101]

Anytime!

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