Joined Feb 2006
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Status: Blah blah blah
|1,410 Posts
Can somebody explain this concept to me? I've heard it mentioned a couple of times but cannot find a concrete description, something to do with limit orders apparently?
The breaking of a wave cannot explain the whole sea.
Figuratively, I think it means you are still profitable after taking into account trading costs (eg the bid-ask spread, commissions, slippage etc...). IOW, your edge is large enough that you can overcome the spread.
I have not heard this term used for LMT orders, but I guess you can "beat the spread" by "stepping in front of the spread". For example, if your broker is ECN and is showing a bid/ask of 89.79/89.82, you can "step in front of the spread" by putting in a bid of 89.80 LMT.
