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Looks like the broker underjumps my ask price automatically

Personal Finance & Money Asked by Dragan D Panic on September 28, 2021

I start using a broker for crypto some 5 days ago but today I noticed whenever I offer lowest ask price the "guy" offers 1 pip lower price instantly, like really within a tenth of a second every time. I tried with price much lower then others and still the "guy" askes immediately just a pip below. How is that possible? This broker usually has a large enough spread for me to trade just the spread the whole day. Are they trying to prevent me to trading on a spread?

One Answer

I don't trade crypto but I assume that it's no different than for stocks and options.

A Pegged-to-Primary order allows you to set a limit price you're willing to buy (or sell at) as well as an increment for adjusting your order until that limit price is reached.

For example, suppose the quote for XYZ is $100.00 x 100.25 and you're willing to pay up to $100.15 for it and you provide a one cent increment. You place an order to buy at $100.01 and every time someone raises the bid, your order will be increased by one cent so that you will be the best bid until price reaches $100.16, at which time your bid will no longer increase.

What sometimes happens with illiquid equities is that if I cancel my $100.15 order, the pegged order will drop back down to $100.00. If I bid $100.01, the process repeats. And sometimes, if I bid $100.00, the pegged order remains at $100.00 because of the price and time requirement of NBBO, I am behind the peg order so it has no need to increase.

Answered by Bob Baerker on September 28, 2021

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