Stock Market Bid and Ask.

by on April 6, 2009

I have been trying to find all over the internet something about the bid on the stock market. Most of the information available was on what bid is, or its definition. I really didn’t care what it was, what I really cared for was how it was formed. We have all these people, and institutions buying stocks or bidding for stocks, how is the bid formed? Is it a mean of all the input prices, or is it formed depending on other factors?

Another thing is that I was watching some stock that was around $.25 and all of a sudden someone buys 100 measly shares at .28 how is that possible? This was not the type of stock that was heavily traded, it was maybe like 2 -3 transactions per minute. I actually tried once to buy some stock at a higher price than what it was going for and it didn’t work. And of course I started thinking Conspiracy or pump and dump action. Buying 100 shares for $25 when the price for trade is $10 is really not worth the effort unless that would raise the price of overall bid and ask in such a way that the people that initiate the spike gain at the expense of the other people that lose. So if anyone wants to be kind and explain these two processes of “how is the bid and Ask formed” and how is “the price jumping”, please do so for us the non-initiated.

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