In February Nasdaq launched an AIR application that tracks every bid and ask price on a stock.
The bid and ask spreads on corporates are prohibitively wide and offerings in size are practically nonexistent.
So the bid and ask price will be the same as it would be on an exchange.
The cost of buying a second-hand Treasury at Fidelity is half the spread between bid and ask prices.
By creating a tax wedge between the bid and ask price of financial assets, the APT tax provides incentives to lengthen the average holding period of financial instruments.
As is always the case with ETFs, limit orders and stops must be used because quite often the spread between the bid and ask can be very wide.
The new rules on stock quotations get at the ability of investors to get in the middle of the spread between the bid and ask prices quoted by market- makers.
But the most actively traded ones, where bid and ask prices are a penny off rather than a dime or more, are the best way to gain exposure to these markets.
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Yet even with this large subsidy, PPIP's chance for success is low because of the substantial gulf between the bid and ask prices on the toxic assets, and the reluctance of investors to partner with the government.
The best way to protect yourself is to use limit orders when placing an order to buy or sell a stock or an exchange-traded fund. (See How Your Buy and Sell Orders Get Filled for more.) Look at the bid-ask spread and set your price limit at the bid for selling a stock and at the ask for buying a stock.
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Dark pools are known for cutting costs as some venues allow trading at the midpoint between the bid and the ask price.
This can be particularly challenging if your stop order triggers during a pre-market session when spreads or the difference between the bid and the ask are wide.
One issue for investors, according to Mr. Rosenbluth, is that this two-year-old fund is thinly traded and can have a wide bid-ask spread (the difference between the prices potential buyers "bid" to acquire shares and the prices potential sellers "ask" to part with theirs).
If the ETF is little traded the bid-ask spread will be high, and a reasonably small order may move the market.
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Brokers push them, he says, because the pricing is opaque and most customers will never see a bid-ask spread.
Advisors typically collect higher fees for trading strategies, brokers collect more commissions, exchanges earn a fee from each transaction, and market makers gorge themselves on the bid-ask spread.
Early last week, bid-ask spreads on European government bonds from Spain and Italy touched some of their widest levels of the year, said Tradeweb.
One option would be to keep tenders fixed, but to ask for collateral that covers the entire bid and not just the funds allocated.
In the example, the spread is 0.15% (that is the bid subtracted from the ask, divided by the share price and multiplied by 100).
Maybe Congressman Barton should drive to the Gulf Coast of Texas or to the Gulf Coast in Louisiana, Mississippi, Alabama and Florida and ask the people down there whether his opening bid should have been an apology to BP.
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Electronic trading has shortened settlement times, lowered bid-ask prices for frequently traded stocks, reduced brokerage costs and improved the flow of information.
By comparison, the bid ask spread for the large much traded SPDR is a very reasonable 1 cent and even very large trades will not move the market.
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