Bid and ask... no limit orders
So I'm understanding that the bid is the price buyers are willing to pay for a stock, and ask is the price sellers are willing to sell for.
But what if there are no limit orders... only market orders.
So buyers and sellers haven't set any limits on what they're buying or selling for. What is the bid and ask in this situation and what happens? Thanks in advance.
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Nothing would get traded if you submit a market order into a blank order book.
This basically never happens in reality as very wide spreads tempt a whole range of groups back in to make limit orders on both sides of the order book, albeit still with a big spread (such as the order books you see on many micro cap stocks), and thus market orders stay valid, albeit much worse value than in very liquid stocks.
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