Order imbalance

Order imbalance

Orders of one kind for a stock not offset by the opposite orders, which causes a wide spread between bid and offer prices.

Imbalance of Orders

The excess of buy orders or sell orders for a given security. That is, an imbalance of orders occurs when more brokers or investors have made more orders of one type such that they cannot be matched to orders of the opposite type. Order imbalance in either direction reduces the liquidity of a security and thus specialists and market makers attempt to keep imbalance at the lowest possible level. Extreme order imbalance may result in the temporary suspension of trade.

order imbalance

An excess of buy or sell orders such that it is impossible to match one type of order with its opposite. Order imbalances usually occur after unexpected news causes a rush to buy or sell a security. In extreme cases, an order imbalance may cause suspension of trading in a security for a limited time. Also called imbalance of orders.

Order imbalance.

An order imbalance occurs when there are substantially more buy orders in a particular security than there are sell orders, or the reverse. The result is a wide spread between bid and ask prices.

A specialist on an exchange floor might ease a minor imbalance by purchasing shares if there was not enough demand or selling shares if there was more demand than supply.

Major imbalances typically result in a suspension of trading until the situation that caused the imbalance is resolved. Either very good or very bad news about a company may trigger an imbalance.