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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: Tai Jin who wrote (7320)5/20/1999 6:47:00 PM
From: Eric P  Read Replies (2) of 12617
 
Since MMs can continue to display their price for a few seconds after the fill, what happens to a market order that comes in if there are no other limit orders at that price (assuming it is at the inside market)? Is it executed at that price, and if so, who fills the order?

The market order would simply sit there, unfilled, until the market maker either filled the order or backed away. Note: This can take well over a minute at times, as the market maker may choose to fill one 100 share lot every 17 seconds (and you may be #10 in line with your market order). Once the market maker backs away, the market orders all drop to the next level to be filled, where those market makers are forced to fill at least one 100 share lot every 17 seconds, each. Eventually, your market order and all of the others will be filled, which will likely be at the precise bottom of the swing for the stock. You will get your stock finally sold, and the stock will then quickly jump up by 1/2 point. Fun game!

Good luck,
-Eric
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