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Suppose I place a limit buy order at $10.00 per share for company XYZ on the NYSE or Nasdaq, while the spot price is say $10.25. If my limit order subsequently executes (whether 5 minutes later or 5 days later), does that necessarily imply the spot ask price must have reached $10.00 per share, if even for a brief moment? Or is it possible for such an order to execute independent (to a degree) of current spot prices?

Edit: if I'm using any terminology incorrectly please advise.

DuckMaestro
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2 Answers2

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Think of all the limit orders waiting in line, first organized by price, and then by the time the order was placed (earlier orders are closer to the front of the line). In order for your buy order to trade, there must be no other limit orders of 10.01 or higher, or the sellers order would have matched with them instead. So once your order is filled, the price is 10.00, even if just for a millisecond, because there was a trade at 10.00, even though the price might go right back up after the trade.

John Roberts
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I can't say I know everything about the underlying details, but from what I understand, your limit buy adds to the bid side of open orders, and one possibility is that someone placed a market order to sell when the bid price for the stock fell to $10 which was matched to your open limit order.

So using your terminology, I would say the spot bid price is what fell to $10, even if for a brief moment.

Whether or not it is possible for your order to be filled when the limit buy price is deeper than the current bid price is beyond me. It may have something to do with lot sizes.

fideli
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