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Let's say that for some stock, the current highest bid price is $5.01 and the current lowest ask price is $5.05. Or in more detail, the following orders are queued (for simplicity, only one share per order):

  • Ask $5.07 (A1)
  • Ask $5.06 (A2)
  • Ask $5.05 (A3)
  • Bid $5.01 (B1)
  • Bid $5.00 (B2)
  • Bid $4.99 (B3)

If I were to place an order now, to sell (ask) with a limit of $5.00, what should happen?

  1. Will it be matched with order B2?
  2. Will it be matched with order B1? In that case, who will be the recipient of the leftover 1 cent?

How would the situation differ in case I would place an order to sell for $1.00 instead of $5.00?

Snackoverflow
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1 Answers1

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If the highest bid is $5.01 and you place an order to sell at $5.00 then you will receive $5.01 . If your sell order has a larger voume than the shares that are available at $5.01 then you will also sell some shares at $5.00

If you were to place an order to sell for $1.00 then your limit order would go on the order book. Perhaps it would be (A-100)? :->)

Bob Baerker
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