Bid and ask... no limit orders

Question

So I'm understanding that the bid is the price buyers are willing to pay for a stock, and ask is the price sellers are willing to sell for.

But what if there are no limit orders... only market orders.

So buyers and sellers haven't set any limits on what they're buying or selling for. What is the bid and ask in this situation and what happens? Thanks in advance.

If there are no limit orders then there is nothing in the order book, aka no market. — Bob Baerker, Nov 19 '18 at 15:42

score 1 · Accepted Answer · answered Nov 19 '18 at 15:33

1

Nothing would get traded if you submit a market order into a blank order book.

This basically never happens in reality as very wide spreads tempt a whole range of groups back in to make limit orders on both sides of the order book, albeit still with a big spread (such as the order books you see on many micro cap stocks), and thus market orders stay valid, albeit much worse value than in very liquid stocks.

answered Nov 19 '18 at 15:33

Philip

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This is incorrect. Depends on exchange to price the transactions. – Dheer Nov 20 '18 at 17:20

Bid and ask... no limit orders

1 Answers1