What is Stock Ahead?
Future stock refers to a situation where an order is placed, but not executed, due to a previously sent order for the same price. Depends on Exchanges priority rules, this can also happen when two bids or offers are made with identical prices. Orders are placed in a queue and are filled according to the exchange’s priority rules when liquidity at that price is available.
Key points to remember
- Each exchange has rules for which order takes priority when two (or more) orders arrive at the same time for the same price.
- Coming stock refers to stocks that are ahead of other orders in terms of fill.
Understanding upcoming stock
Future stock refers to the queue of orders awaiting execution. Five traders can place a limit order at the same price. Their commands form a range. The person who placed their order first is on the front line and will be completed first when liquidity is available at that price. The second command received will be executed second, and the third command third, and so on. Anyone who is not on the front line has a “stock in front” that must be filled before their order is fulfilled.
Different exchanges have different priority rules. Some are based on the time orders are received, such as Nasdaq, as mentioned above. It’s quite simple: the first person at that price is filled first when stocks are available.
Other markets may use a hybrid system. For example, on the New York Stock Exchange (NYSE), the first person in line gets most of the shares, but other orders at that level get shares as well. For example, there may be five salespeople on the to offer. If a market buy order comes in, the first in line gets the most, but the other four sell orders also receive a small portion of the buy order (filling or partially filling their sell order).
Coming stock usually refers to limit orders where a specific price is requested. Market orders will fill at any available price, usually instantly, and therefore have no stock in front of them. There are also priority rules for this, which vary by exchange, if two market orders are received at exactly the same time. NYSE executes the largest order first.
Example of Stock Ahead on the Nasdaq
Bert places a limit order to sell 100 shares of Apple (AAPL) shares for $250 per share. While his order waits, Ernie sends a limit order to sell 1,000 Apple shares at the same price. When the price rises near $250, suppose someone places an order to buy 100 shares at $250.
Since the buy order is for 100 shares and Bert was first selling at $250, his 100 shares will be filled. Ernie sells his 1,000 shares for $250, but he’s now on the front line. Apple is listed on the Nasdaq stock exchange, which fills orders based on the time they are received.
If Jill places a sell order for 500 shares at $250, she will have to wait until Ernie is able to sell his 1,000 shares. Once someone has bought Ernie’s 1,000 shares, Jill will then be filled with subsequent buy orders (to fill her sell order). Until that happens, Jill has stock in front of her.