Will someone please explain how mm's come up with the quantity number that pertains to the bid/ask? Investopedia seems to have a partial explanation. And when buying or selling should I take that number into consideration? TIA
Posted by metal1 on :
in the real world (NYSE, NASDAQ, AMEX) the specialist/mm is there to provide liquidity and maintain a fair and orderly market place. for the most part the bid/ask size is determined by orders they have in the book. ie, you want to buy 1000 xyz at 1.00, they display the bid size of your order plus any others. if they have no customer orders they generally display a small amount 500-1000 shares to provide their own liquidity to the market place.