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Oh, right. That makes sense. Hence it's that magical point where an ask equals a bid, and thus: trade! So doesn't that essentially mean that at the point of me
by jachee 6y ago
Oh, right. That makes sense. Hence it's that magical point where an ask equals a bid, and thus: trade!
So doesn't that essentially mean that at the point of measurement—that is, a trade occurring—the price is both lowest ask and highest bid?
- ycombobreaker 6y agoYes, a trade represents an instant in time when a potential buyer and a potential seller agree on a price. The highest bid matches the lowest ask, and then the exchange "matching engine" generates a trade from them. Instantaneously afterward, the highest remaining bid will be below the lowest ask. When anyone talks about "the price" of a stock it is an approximation of some sort. Probably they mean the last traded price; maybe the midpoint (bid+ask)/2; maybe the symbol is in the middle of an auction and they mean the auction clearing price.