*edit* Can an admin please move this to beginners forum asap... **** I'm an observant one aren't I...
So i've been following the ASX company announcements closely lately, trying to scalp them - just on paper at this point. I get announcements through the asx website and track the prices through comsec. Problem is, i've noticed a phenomenon which I don't understand...
The market depth, as i understand, is a list of all the standing buy and sell orders and their respective prices and quantities right? So if you issue a market order it should instantly (or close to) execute at the relevant bid/offer?
Perhaps it's easier if I just explain what I've seen. Immediately after a piece of good news, on a fair few stocks i've noticed that for a few minutes the bid exceeds the offer. Now I know this is totally normal when stock is in pre-open or suspended... but this is just in normal trading. Basically what I'm asking is, if the top bid is equal to or above the lowest offer price, shouldn't the orders be instantly matched up? It's as if there's a little mini pre-open style auction going on. By the time a trade actually goes through there's often not much give in the price to profit from.
And I should mention that these stock aren't overly illiquid either. At the offer price there has always been a fairly large order. I don't get it. Do brokers for stocks screw people over around news time the same as forex brokers?
Any feedback greatly appreciated.