This means buyers will never pay more than their bid price, and sellers will never receive less than their offer price - but both buyers and sellers have the potential for a better price than their bid or offer.
When you submit a limit order, your best price is submitted into the order book immediately. All orders are anonymous, but other investors can see someone is willing to buy or sell the specified number of financial products at the specified price in your limit order.
Auto bids and auto offers
Use the auto bid or auto offer function to automatically improve your bid or offer, if it is outbid, up to your specified best price.
When you submit an auto bid or auto offer, your price is submitted as a standard limit order. If your price is outbid, it is automatically withdrawn and re-submitted at incrementally better prices, up to your specified best price. This means your best price won’t necessarily be submitted immediately into the order book – only the price that is sufficient for your order to trade to the maximum extent possible.
If there are no existing orders that your auto bid or auto offer could trade with, nothing is submitted into the order book until there is an order it can trade with. If your auto bid or auto offer is outbid at its best price, it will remain in the order book at its best price, unless you withdraw it, as new orders could be submitted that allow your order to trade in whole or in part.
Investors only see the limit orders that are actually submitted into the order book. No one else sees the details of your auto bid or auto offer best price.
The pros and cons of auto bids and auto offers
Auto orders allow you to ‘set and forget’. There’s no need to log in to the auction when it’s closing to try to outbid other investors.
If you submit an auto order, a later limit order at the same best price may take priority over your order if the price submitted into the order book for your auto order had not reached your best price before that limit order was submitted.
Auto orders can help to avoid disorderly pricing that could result from an investor submitting a very aggressively priced order – the investor is likely to receive better pricing and there are less likely to be unfair price fluctuations using auto bid and auto offer. For this reason, if you wish to submit a bid to buy financial products at a price much higher than the expected price, or you want to offer to sell financial products at a price much lower than the expected price, we may require this to be done by an auto bid or auto offer rather than by a limit order. Don’t worry – other investors won’t be able to take higher priority by submitting a limit order, because we will require all investors to use auto orders based on the same thresholds.
For more technical information on the order book and how a ‘fair’ price is calculated, have a read of our technical information page on how auctions work.