Market Versus Quote (MVQ)

What Does Market Versus Quote Mean?

A market versus quote (MVQ) is a comparison between the last price at which a security is traded and the latest bid and ask prices.

Figuring out Market Versus Quote (MVQ)

Market versus quote (MVQ) comes up when the bid price is a similar price at which a buyer will purchase a security. The ask price is the price a seller will acknowledge for a security. Generally the best bid and ask prices will be close to the market price, yet periodically, especially in a meagerly traded security, the market price can vary essentially from the bid-ask price. Securities that trade at high volume and with greater liquidity commonly have a smaller MVQ value. On the other hand, securities that are illiquid will generally have a larger MVQ value.

This relationship means a trading instrument's market versus quote value can give an indication of the type of liquidity under which the instrument trades. Higher values can signal a meagerly traded instrument that investors might see as more testing to trade. Meanwhile, smaller values might distinguish instruments that trade at higher volumes and keep up with higher levels of liquidity, making them ideal applicants particularly for active traders and short-term traders.

Why Market Versus Quote Matters

A stock's MVQ can illuminate a investor of its liquidity. A smaller MVQ value proposes that a security is more liquid than one with a higher MVQ. For instance, accept that stock ABC last traded at $42.50 per share and the current bid-ask prices are $42.48 and $42.52, individually. Stock ABC has a MVQ value of two pennies, which is viewed as a small value and hence shows a liquid instrument. Stock XYZ, then again, last traded at $42.50 however has bid-ask prices of $41.50 and $43.50. Stock XYZ has a MVQ value of one dollar, which is viewed as a large value and shows a illiquid trading instrument.

The market versus quote value addresses the difference between the last market price at which a security was bought or sold and the latest bid and ask prices. A trading instrument's MVQ likewise shows the amount a market maker or broker takes as a commission for trading a security for a buyer or seller's sake.

A market maker is a market participant or a member firm of a stock exchange. Market makers buy and sell securities at prices showed in the exchanges' trading system for either their own accounts, which are called principal trades, or customer accounts, which are called agency trades.