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This is a discussion on prop firm traders... within the General Trading Chat forums, part of the Reception category; Is there a difference between big/ask and bid?...yeah...half the spread......

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Old May 1, 2009, 11:56am   #15
 
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Is there a difference between big/ask and bid?...yeah...half the spread...
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Old May 1, 2009, 11:59am   #16
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Technically Fundamental started this thread I know that lol. I mean in terms of understanding the markets and getting an indication of whats going to happen is it better so watch the bid/ask price over the mid
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Old May 1, 2009, 12:06pm   #17
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yes and it means trading in decent size.

well everything has a price and a value. You look at the intrinsic value in comparison to the price and decide whether to trade. i.e. is something underpriced and therefore cheap, or overpriced and therefore expensive.

now i know these things might pass by some on here but if you are trading someone's cash you have to havea reason behind doing it.

take an example in crude oil. you think crude oil for september delivery will be $65 due to OPEC cuts and increasing demand towards the end of the year. Sep crude is trading right now at $53.85 so you buy it. You have to have a reason for doing that trade. You could look at another example, say US interest rates. You would like to expresss your view that rates will go up by December and you wish to do it through options. What options structure do you use? Put spread, puts, put fly etc then you have to understand the risks invoved with that trade i.e how much will it cost to put the trade on, how will the cash flow from the exchange/clearer work over the life of the option, things like this.

depends on the liquidity of the market. if GBPUSD is 1.4893/1.4898 then fine but if say some AIM stock is listed with a 70p bid offer spread on a £2 stock then you have to wonder what use just the bid price is.
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Old May 1, 2009, 12:10pm   #18
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Technically Fundamental started this thread So slowing you down a bit there, ask would be best to check against intrisic value if you wanted a long position and vice versa?
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Old May 1, 2009, 12:13pm   #19
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personally i'd want to know bid, ask and if it has traded at all and if so where.
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Old May 1, 2009, 12:17pm   #20
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Technically Fundamental started this thread
Quote:
Originally Posted by gooseman View Post
You have to have a reason for doing that trade... What options structure do you use? Put spread, puts, put fly etc then you have to understand the risks invoved with that trade i.e how much will it cost to put the trade on, how will the cash flow from the exchange/clearer work over the life of the option, things like this.
So this is where macro/fundamentals and the maths comes in. I have no idea what those option structures are by the way lol.

Quote:
Originally Posted by gooseman View Post
depends on the liquidity of the market. if GBPUSD is 1.4893/1.4898 then fine but if say some AIM stock is listed with a 70p bid offer spread on a £2 stock then you have to wonder what use just the bid price is.
I get ya...

So when you have DMA what does that show? bid/ask/mid?
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Old May 1, 2009, 12:21pm   #21
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depends on what product.

you get bid, ask , last trade price and time and usually somewhere the volume traded in that session.
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