What is Auction Market ?

The term Auction Market is defined as a term in which buyers enter competitive bids and at the same time competitive offers are entered by the sellers. In short, the buyers indicate the highest price they are willing to pay and the sellers indicate the lowest price they will accept. The price a stock is traded represents the highest price that a buyer is willing to pay and also the lowest price that a seller is willing to sell the stock. The orders are then executed by pairing matching bids and offers. Though most of the trading is done via computer, but trading can also take place via open outcry where buyers and sellers practically call out prices to each other.  An example of an Auction Market is the New York Stock Exchange. The markets also differ from over the counter where trades are negotiated. The main purpose of such a market is to connect buyers and sellers in the most efficient manner.

Ads by Google

Edited and Updated 31st May 2014

You can leave a response, or trackback from your own site.

Leave a Reply

You must be logged in to post a comment.

Powered by WordPress