The term primary peg order refers to those that follow the best bid, when buying a security, and the best offer, when selling a security. Primary peg orders allow traders to get the best possible price as a security moves within certain boundaries.
Peg orders are frequently used by traders in volatile markets, because they provide the opportunity to get the best possible price when buying or selling a security. Peg orders are based on the National Best Bid Offer (NBBO). The National Best Bid (NBB) is the highest price a trader is willing to pay for a security (or stock); while the National Best Offer is the lowest price someone is willing to receive when selling a security. The NBBO refers to the difference between the NBB and NBO, and this is known as the spread.
Also known as regular peg orders, primary peg orders are "pegged" to one side of an order book. For example, if the trader wants to sell a stock, it would be pegged to the offer side of the order book. Peg orders allow a trader to track the best offer when they are selling a stock and the best bid when buying a security. It's also possible to place a limit on the order, which is the highest price the trader is willing to pay for a security, or the lowest price they are willing to receive when selling a security.
When a peg order is placed, it displays the best bid; it will not reveal the trader's limit price. If the best bid is below the trader's limit price, and an investor comes into the market with a sell order, the trader will get the best bid price.
A trader would like to purchase 1,000 shares of Company XYZ, but is not willing to pay more than $20.00 per share. The NBB is currently $19.80 per share, while the NBO is $20.20. The trader places a peg order with a limit of $20.00. When the trader places their peg order, it does not show the market their limit price of $20.00; instead it joins the NBB of $19.80. If the NBO price reaches the trader's limit price of $20.00, a buy order is executed.
market peg orders, National Best Offer, National Best Bid, market order, limit order, day order, long position, alligator spread, dark pools, discretionary orders, Do Not Reduce orders, midpoint peg orders, Not-Held orders, order book
Explore Investing Further
Trading has never been easier, thanks to the rise of online platforms that enable you to buy and sell various assets at the click of a button. But with so many options available, it can be challenging to decide which platform is right for you.
Looking for a way to avoid swap fees while trading forex?
Below listed are the small reviews of the top 10 ETF brokers available across the United States.
Our top beginner's pick for copy trading is eToro. Read on for more details, plus seven good alternatives.
Swing trading stocks can be a great way for investors to take advantage of short-term stock market movements and gain significant returns. If you're interested in swing trading, the key to success lies in selecting the right stocks to buy and sell quickly for a profit.
The table below lists the best stock picks under $2, listed on public exchanges.
The table below lists the best stock picks under $1, listed both on public and OTC exchanges.
This section will highlight the best EV-trading penny stocks available in the United States.
The demand for sustainable energy has grown rapidly in recent years. This has resulted in increased scrutiny of the automotive market. As a result, the electric vehicle (EV) industry has made significant advancements.
Intelligent Bio Solutions Inc. is a life sciences company, founded in 2016 with headquarters in New York and is engaged in performing diagnostic tests, real-time monitoring, and non-invasive surgery for its patients. The firm has developed a CoV-2 Biosensor, which can be used in RNA virus detection.
Hour Loop was founded in 2013 with headquarters in Redmond, Washington. It’s an online retailer involved in e-commerce in the United States that hit the public markets on Jan 7th of 2022. The company sells home/garden decor, electronic products, kitchenware, and apparel through walmart.com, amazon.com, and hourloop.com.