Bid And Ask Price Thresholds As Technical Indicators
Published: 2023-12-31 12:09:11

The original MS word file can be downloaded [here](https://github.com/Double-X/My-Articles/blob/master/Bid%20And%20Ask%20Price%20Thresholds%20As%20Technical%20Indicators.docx).

Note that the following technical indicators only works with **Direct Market Access**.


## Summary

The word "amount" in this summary refers to the number of shares for convenience.



**MBA and MAA**

The maximum number of shares for a bid to be instantly matched in full amount for sure in theory regardless of the bid price is the total number of shares for all unmatched asks, which is also the **Maximum Bid Amount**(**MBA**).

The maximum number of shares for an ask to be instantly matched in full amount for sure in theory regardless of the ask price is the total number of shares for all unmatched bids, which is also the **Maximum Ask Amount**(**MAA**).

**MBA** and **MAA** can also have their respective **K-charts** and **Moving Averages**, which can help investors to decide a suitable number of shares to open/close long/short positions.


**BPT and APT**

For a bid with number of shares not exceeding **MBA**, **Bid Price Threshold**(**BPT**) is the lowest price for that bid to be instantly matched in full amount for sure in theory, but larger shares won't have **BPT** since they can't be matched in full no matter how high the bid price is.

For an ask with number of shares not exceeding **MAA**, **Ask Price Threshold**(**APT**) is the highest price for that ask to be instantly matched in full amount for sure in theory, but larger shares won't have **APT** since they can't be matched in full no matter how low the ask price is.

**BPT** and **APT** can also have their respective **K-charts** and **Moving Averages**, with the catch that invalid **BPT** and **APT** values should be skipped respectively.

These indicators can help investors with a predetermined number of shares for opening/closing long/short positions to fine-tune the precise bid/ask price and the timing.


**BPT and APT ordering**

The **BAPT Ordering Theorem** states that, in **Direct Market Access**, **BPT** is always greater than **APT** for any same or different number of shares of the corresponding bids and asks at the exact same moment, so there are 5 possibilities regarding the ordering among **BPT**, **APT** and the current price:

price < **APT** < **BPT** - Probably meaning that most bidders and askers expect the price to rise or keep rising significantly for quite some time, so it can point to a solid trend based on strong fundamental improvements or a baseless surge caused by good news coming out of thin air

price = **APT** < **BPT** - Probably meaning that most bidders expect the price to rise or keep rising significant for quite some time but most askers expect this trend to diminish or end soon, so it's better to wait and look for signs of reversal unless it's still obviously undervalued

**APT** < price < **BPT** - Probably meaning that the market have drastically different expectations on the upcoming price trend, so it can be due to the price still under corrections or many important but uncertain signs of reversal being surfaced

**APT** < price = **BPT** - Basically the polar opposite of the "price = **APT** < **BPT**" case

**APT** < **BPT** < price - Basically the polar opposite of the "price < **APT** < **BPT**" case


**BPT Table and APT Table**

Because a bid with a different number of shares usually have different **BPTs**, a **BPT Table** can be used to show all **BPTs** with their corresponding number of shares.

Because an ask with a different number of shares usually have different **APTs**, a **APT Table** can be used to show all **APTs** with their corresponding number of shares.

Real-time **BPT Table** and **APT Table** can help investors to weight against different combinations of number of shares with the bid/ask price as well as the pros/cons of different timing to open/close long/short positions.