Buying the bid/ Selling the ask

HaloTrader · Jun 23, 2009

Can someone explain this?
I have an understanding but i'm not sure i'm correct and i'm slightly confused.

foredog · Jun 23, 2009

Bu using DMA you put up an order onto the order book at a chosen price.

So if HSBC ar 512 -512.5

you could join the bid at 512 and if your trade got hit then you've bought at the bid.

the problem is though that if someones hitting the bids then they could easily be 511.5 - 512 next!!!!

gooseman · Jun 23, 2009

this is unsurprisingly what market makers want to do. lock in the spread. normal traders hit the bid or lift the ask.

HaloTrader · Jun 23, 2009

gooseman said:
this is unsurprisingly what market makers want to do. lock in the spread. normal traders hit the bid or lift the ask.

Yeah but how? Through using limit orders?

HaloTrader · Jun 23, 2009

foredog said:
Bu using DMA you put up an order onto the order book at a chosen price.

So if HSBC ar 512 -512.5

you could join the bid at 512 and if your trade got hit then you've bought at the bid.

the problem is though that if someones hitting the bids then they could easily be 511.5 - 512 next!!!!

Well thats the thing, i'm practicing this through a simulator.
If i place a limit order to buy below price say @ 400... The bid will touch my 400 but i won't enter until the bid is at 399... And then i may aswell just buy @ the market at 400?

foredog · Jun 23, 2009

It would seem that the system your using needs to be 400 offered for you to trade.

If your Direct Market then at some point as the bids get hit at 400 then you'll get your stock. If your last then it'l probably seem like it's 399 400 when you get hit!

arabianights · Jun 23, 2009

That's cause your simulator is crap.

Or you're in a market where bids and offers usually trade all out. Or a fifo and you're back of the queue.

HaloTrader · Jun 23, 2009

arabianights said:
That's cause your simulator is crap.

Or you're in a market where bids and offers usually trade all out. Or a fifo and you're back of the queue.

Using NinjaTrader + Zen-fire market data with market depth - The depth is considered in the simulation and considers whether you are filled...
If i place the limit order quite late does that put me at the back of the queue lol ? Like for example Offer is 401 bid 400 - Then i place a 400 limit order to buy?
Is that way too late?

What is the priorities?
Market orders first
Then limit orders
etc etc

HaloTrader · Jun 23, 2009

foredog said:
It would seem that the system your using needs to be 400 offered for you to trade.

If your Direct Market then at some point as the bids get hit at 400 then you'll get your stock. If your last then it'l probably seem like it's 399 400 when you get hit!

DMA ES using NinjaTrader (Zen-fire)
Why is that i'm last in the que then?
Can you explain that a bit more, cheers dude.

Technically Fundamental · Jun 23, 2009

arabianights said:
Or you're in a market where bids and offers usually trade all out

Example?

cr6196 · Jun 23, 2009

if it is any consolation, i have been trying this too on the ym sim...dont get it, it sounds simpler than it is...?

HaloTrader · Jun 23, 2009

Figured it out... I had my simulator up to pretend i'm always back at the que and to always give me partial-fills lol cheers

gooseman · Jun 23, 2009

Aaronmalins said:
Example?

most of them

foredog · Jun 23, 2009

When you put a bid or offer in you will always start at the back of the queue unless yours is the first order place at that price. As the B/O get hit/taken you will get nearer the front and anyone else putting up an order will go behind you.

Technically Fundamental · Jun 23, 2009

gooseman said:
most of them

These DMA sims of any use?

foredog · Jun 23, 2009

doesn't sound like it

HaloTrader · Jun 23, 2009

Aaronmalins said:
These DMA sims of any use?

Only using it to get use to the platform and all the order types etc so i don't make expensive mistakes.

Technically Fundamental · Jun 23, 2009

foredog said:
When you put a bid or offer in you will always start at the back of the queue unless yours is the first order place at that price. As the B/O get hit/taken you will get nearer the front and anyone else putting up an order will go behind you.

So in that case your best chance of getting filled with our kind of size is to enter trades during profit takes etc?

HaloTrader · Jun 23, 2009

foredog said:
When you put a bid or offer in you will always start at the back of the queue unless yours is the first order place at that price. As the B/O get hit/taken you will get nearer the front and anyone else putting up an order will go behind you.

Cheers, very helpful.

So basically the quicker you can place a limit-order the likelihood of a better fill.
Basically though, just to confirm, prices don't have to trade through a limit order to execute.
If the bid is hitting your buy limit order, thats good enough to get a fill?

Thanks x

Technically Fundamental · Jun 23, 2009

HaloTrader said:
Only using it to get use to the platform and all the order types etc so i don't make expensive mistakes.

I just want to know if the trading is the same when you go live. Always good to learn but I dont want to taint what I have learned already with biased sims.

Buying the bid/ Selling the ask

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