very simple bid/ask question

[ski]

at market close for "TASR" the price is at $9.57 but

Bid: 8.09 x 400
Ask: 10.25 x 400

Can someone explain this to me.

Also when buying stocks is the best way just to do a market order? It seems when buying you don't knew EXACTLY how much you will get it for and you have to pay some kind of spread.

For example could I just say I'll buy "TASR" at $9.55 and see if anything hits? When doing a market order do you automatically get the stock as cheaply as possible?

Disclaimer *I'm a total noob and am just trying to learn a bit.

[stinkypete]

9.57 is the last price it traded at.

the current bid is 8.09 and current ask 10.25, meaning you can buy for 10.25 or sell for 8.09.

limit orders let you specify a max price to buy at. they are very common. it's definitely a good idea to use limit orders on stocks with such high bid/ask spreads.

[Sniper]

When the market closes, some firms leave resting orders in the market, well off the closing price, in case someone is really desperate to buy or sell in the aftermarket.

Those quotes get hit far more often than you might expect.

[jively]

Don't trust the bid and ask at the market close or before the market open. The market is open now, and it is
Bid: 9.66 x 200
Ask: 9.67 x 800
Something that trades that much should have a tiny bid/ask spread like this.

-Tom

[kimchi]

[ QUOTE ]

For example could I just say I'll buy "TASR" at $9.55 and see if anything hits? When doing a market order do you automatically get the stock as cheaply as possible?


[/ QUOTE ]

The price you pay at market depends partially on your broker. In the UK a full-service broker may work to get the best price from the market makers whereas a cheapo discount broker will work to just get you filled.

Also, placing a market order outside of trading hours makes you pay the the convenience. The market open provides market makers with unique opportunities at the expense of the weaker amateurs who buy before the open.

A market order allows you to control the time you buy/sell a market at the expense of price. A limit order allows you to control the price you buy/sell a market at the expense of time.

In a fast moving or illiquid market you'll likely pay a high premium to buy at market.

Placing a limit order runs the risk of the market never trading at that price and missing an opportunity to buy or sell.

Your choice of orders depends somewhat on your objectives.

[Karmic]

That is one of the reasons you should never trade market orders in after hours trading. Generally, I'll trade limit orders in smaller cap or more illiquid stocks, and they can take days to fill or never be filled.

Most of the time if you're not a day trader and you are buying a stock you really want and expect to hold for an appreciable amount of time a market order is fine since the difference is likely to be only a few cents at most. you can, and should always check the bid and ask prices before you buy.

if you see

Bid: 8.09 x 400
Ask: 10.25 x 400

you can put your $9.55 limit order and see if it gets filled, it may or may not, but you probably don't want to put a market order for either buying or selling.

If you see
Bid: 9.66 x 200
Ask: 9.67 x 800

and put a market order in for 500 shares you'll probably get them at $9.67 or close to it. If you put a limit order in for 500 at $9.66 it may get filled, or, if the price moves up, it will never get filled.

[SuperWhale]

To the OP if you would like to see bid and asks during the day or afterhours you can see the book on Arca at http://www.tradearca.com/tools/book/book_info.asp. This will show show you more than just one bid and ask, but keep in mind it would represent only a small part of liquidity out there.