Moneyzine
Contents
/Investment Guides /Primary Peg Orders (Regular Peg Orders)

Primary Peg Orders (Regular Peg Orders)

Moneyzine Editor
Author: 
Moneyzine Editor
2 mins
September 21st, 2023
Advertiser Disclosure

Definition

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.

Explanation

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.

Example

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.

Related Terms

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?
  • By providing instant diversification for your portfolio, investing in ETFs can amplify the potential of any investor, novice or seasoned alike. We scoped the market to curate a list of the best ETF trading platforms available for US investors.
  • 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.

Related Content

  • Biden Or Trump: Who Is Better For The Economy And Stocks?
    Yup. This is one of those articles. It's an election year, and here in the U.S., we get to decide which old dude who’s been alive long enough to remember when there were only 48 states in the U.S. will be the leader of the free world.
    March 19th, 2024
  • When it comes to strategic business planning, accounting is front and center, shaping the course of action. At least it should be.
    March 14th, 2024
  • How To Invest in Real Estate Without Becoming a Landlord
    We all know that in order to build wealth and prepare for retirement, investing is the key. However, it can be hard to figure out what to invest in and how to put your money to good use. One of the most talked about ways to build wealth is owning property and being a landlord to bring in passive income. But what if you don’t want to do that? You can still invest in real estate!
    November 15th, 2024
  • Investing In Nature: The Closest You'll Get To Your Money Growing On Trees
    ESG (Environmental, Social, and Governance) has become a polluted word for many traders and investors - but that doesn't mean it's going completely away. Nor does that mean you can't profit from nature or sustainable practices. But there are some opportunities in the regenerative ag, conservation, and green real estate spaces.
    February 29th, 2024
  • How to Invest $100 and Grow it to 6 Figures
    Turning $100 into six figures is a goal no one should realistically have. But it's the question you might ask yourself: Can it be done? Sure. Probable? It's less probable than winning the lottery, but technically still probable - like finding a needle in a haystack the size of Canada. But possible? Absolutely.
    October 29th, 2024

Contributors

Moneyzine Editor
The Moneyzine editorial team consists of writers and content specialists with diverse backgrounds.
Moneyzine 2024. All Rights Reserved.