FEC Financial Engineering Club. Agenda. Trading The Order Book and Order Types Market Participants. What is trading?. Economics : Multiple parties participating in the voluntary negotiation and then exchange of one’s goods and services for the desired goods and services of another.
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If we put this bag up for auction, we might see the following:
Asks or sell orders
Bids or buy orders
No sell orders at 522.14
675 sell orders at 522.22
Only 5 shares at best bid
Exchange fees for CME
What’s opportunities do we have here?
BUY on NASDAQ @ 522.21
Sell on BATS @ 522.22
Profit: (522.22-522.21)*quantity = .01*quantity
How can you hedge some of this downside risk?
(that is if you convert GBP to Euros, then Euros to USD, then USD to GBP, you should have the same amount of money you started with, ignoring bid-ask spreads)
How can we profit from this mispricing?
Now we have £ 600,000.00
Now we have € 732,000.00
Now we have USD 1,024,800.00
They do this to avoid others from identifying him/her in the markets. TD Ameritrade has its traders sell off the bonds according to certain rules to avoid a steep decline in the price of the bonds.