What is Ask and Bid Trading?
Ask and Bid is the trading procedure followed in Over-The-Counter markets like OTCBB and Pink Sheet markets. It contradicts the auction bid trading method followed by traditional stock markets. Ask and bid trading method allows bargaining and thus can favor both the trader and the market maker.
Ask and bid type of trading is carried out on phone or via a computer network and requires a broker dealer network for direct interaction. The general procedure of ask and bid trading is as follows. The trader places the order, for the stock he wants to buy, with a specified price to the broker offering his trading account. The broker contacts the market maker issuing that stock and negotiates with the market maker for the price. If the negotiation is a success then the stocks are transferred to the trader’s account.
Recently NobleTrading introduced direct access trading for OTCBB and Pink Sheet markets. In this the trader can directly interact with the market maker without any broker assistance to get his quotes. The advantage of ask and bid trading system is the bargaining ability. This is the reason why many OTCBB listed companies qualified for NYSE have choose to remain in OTCBB market.
Ask and bid type of trading is carried out on phone or via a computer network and requires a broker dealer network for direct interaction. The general procedure of ask and bid trading is as follows. The trader places the order, for the stock he wants to buy, with a specified price to the broker offering his trading account. The broker contacts the market maker issuing that stock and negotiates with the market maker for the price. If the negotiation is a success then the stocks are transferred to the trader’s account.
Recently NobleTrading introduced direct access trading for OTCBB and Pink Sheet markets. In this the trader can directly interact with the market maker without any broker assistance to get his quotes. The advantage of ask and bid trading system is the bargaining ability. This is the reason why many OTCBB listed companies qualified for NYSE have choose to remain in OTCBB market.
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