BTV 2.33% 21.0¢ batavia mining limited

re:the 1 share bid/offer in simple terms The 1 share bid/offer...

  1. 516 Posts.
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    re:the 1 share bid/offer in simple terms

    The 1 share bid/offer are a bit of a mystery to most people, but are very common as part of the trading process. The 1 share trades are not common as they should not happen and are due to a trader stuffup.
    A broker may have Client A who wants to sell say 20,000 XYZ at 2.00. He knows he has another Client B who wants to buy 20,000 XYZ at $2.00. If he can do the trade between his 2 clients he gets the commission both ways in just one trade, so it is 2 commissions earned at low admin cost.
    There is however, a requirement that he has to be on the list on both sides of the trade. So to get on the other side he will put 1 share on the bid side and this must be no more than one tick from the ask that he wants to cross.
    So when one of these is at the top of the list, the cross is done and the 1 share bid is cancelled at the same time, and the 1 share trade does not happen.
    Now this is all very well until the trader goes to sleep, is outside for a smoke or has gone to the toilet. One side of the cross gets to the top and trading stops for a while all the other traders wait for the cross to happen. If it doesn't happen fairly quickly other traders will say "tough" and take his 20,000 and/or his 1 share, so that trading can continue and not only has he not done his cross, but he now has to stuff around in order to cancel the 1 share trade. This is why you actually see the 1 share trades occurring.
    In fact most of the 1 share trades you see are where the trader has done his cross, but forgets to cancel the 1 trade bid or ask.

    I hope this has shed some life on your comment of sorts :~)
 
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