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Market Mechanics

5 terms

Market Mechanics

The lowest price at which a seller is currently willing to sell shares.

Why it matters

The ask helps show the price you may have to pay if you want to buy immediately.

Example

If the best ask is ₱101.00, a buy order that crosses the spread may execute at or near ₱101.00, depending on available shares.

Market Mechanics

The highest price at which a buyer is currently willing to buy shares.

Why it matters

The bid shows where immediate buying interest currently sits.

Example

If the best bid is ₱100.80, a seller wanting immediate execution may need to sell at or near that level.

Market Mechanics

The difference between the best bid and the best ask.

Why it matters

A wide spread increases trading friction and can make short-term strategies harder to execute efficiently.

Example

A ₱100.80 bid and ₱101.00 ask create a ₱0.20 spread.

Market Mechanics

An order intended to execute immediately at the best available prices.

Why it matters

The final execution price is not guaranteed, especially in a fast or illiquid market.

Example

A market buy can fill across several ask prices if there are not enough shares available at the best ask.

Market Mechanics

An order that sets the highest price you are willing to pay when buying, or the lowest price you are willing to accept when selling.

Why it matters

A limit order gives more control over price, but it may not execute.

Example

A buy limit at ₱50.00 will not intentionally pay more than ₱50.00.