Two-Way Quote

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Definition: Two-Way Quote

Two way quote is a type of quote which gives both: the ask price and the bid price of a security, suggesting the would-be traders of the securities’ current price at which the traders can buy/sell the securities. The two-way quote also reveals the spread between ask and the bid, giving the traders a hint about the current liquidity of the security (a smaller spread would suggest about more liquidity).

 

Explanation:

This type of quote relatively provides far more information to users than a normal last-trade quote that quotes only the price at which that security last traded.

 

An example of a two-way quote is: Walmart quote of $54.50/$55.30.

This tells traders that they can currently buy Walmart shares for $55.30 else sell them for $54.50. The spread between ask and the bid is $0.80 ($54.30-$52.50).



This two way quote should be used carefully as it tells about the liquidity as well the spread between the bid and the ask price.

 

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