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Why would a bid price on stock keeps rising without trades?
I was following a very thinly traded stock, (usually trades just a couple hundred shares a day), and usually it just sits there, with a couple changes a day in the bid or ask. A few days ago, I was watching streaming quotes and about every second the bid price would rise a penny. After about 50 cents, it would drop back down, then do it again. During this time, there weren't any actual trades.
Is this some type of electronic or computer trading? I can't imagine a large company doing this because the stock is too small to matter.
4 Answers
- underexposed...Lv 79 years agoFavorite Answer
it is kinda like fishing...in this case you have a small pond with very few fish in it...so you bait your hook with one worm...no fish are interested....add another worm to the hook...still no response....so you keep adding more worms to make you bait standout and finally reach a bait amount that attracts a fish. (in investment terms...you keep adding $'s or pennies to your bid until some investor is willing to sell it to you.)
Trading a ultra low volume stock is not a good idea unless you are going to salt it away for a year or so and accumulate more stock in the company along the way....why would you do this ...because you feel this stock (through your rigorous DD) is onto something and will eventually be recognized for it and you will make a profit down the road.
Why is it not for a day trader or short swing holder....They have trouble buying it for the price they want AND when they want to sell it there is difficulty selling the shares as no one is particularly interested in that company.
It is not computer trading....IT IS LACK OF INTEREST IN THE COMPANY
- ?Lv 79 years ago
The bid is the highest price that someone is currently bidding (offering to buy). The ask is the lowest price that someone is asking for the stock they are selling.
Bid: 45 cents
Ask: 55 cents
No trade.
If someone places a buy order with a bid of 50 cents, now the market will show:
bid: 50 cents
ask 55 cents.
If someone places a sell order with an ask of 50 cents, the seller and buyer are matched at 50 cents. There is a trade at 50 cents, and since both of their orders are satisfied, the next highest/lowest orders will s how.
- RadDadLv 49 years ago
Cuz some fool might try to buy the stock on a market order. Stay away from stocks with small volume.
- 9 years ago
The speed and complexity of the markets have continued to change at a rapid pace — with trade times now measured in millionths of a second — a growing number of studies and market participants suggest that those benefits to investors have stalled or even started to reverse.
High-speed trading firms have thrived in the computerized markets and now account for more than half of all stock trading, up from 26 percent in 2006. They've reached the point where the competition is measured in microseconds and there are essentially no benefits to the public at that level
Source(s): http://www.nytimes.com/2012/08/14/business/on-wall... http://voices.yahoo.com/how-earn-weekly-income-tra...