I've been watching the L2s of a few fairly illiquid stocks lately, and occassionally the screen will show no Ask offers for the stock in question.
In this situation, assuming it isn't an error with my screen, what would occur if I were to come along at that instant and place a market buy order? I'm assuming it would just sit there unfilled until an Ask offer showed up, and then immediately fill at whatever price is offered, since a market order attempts to buy at the best available price at the time.
I assume this opens the door wide open for someone to gouge me with no limit order in place. My question is this: by just how much can they gouge? Is there some sort of protection mechanism in place to prevent me from being completely ripped off by a huge mark-up of the stock price (IE: The stock is trading at $5 and the person offers it to me at $10)?
If that could happen, it'd almost be enough to make me never want to touch a market order again.
In this situation, assuming it isn't an error with my screen, what would occur if I were to come along at that instant and place a market buy order? I'm assuming it would just sit there unfilled until an Ask offer showed up, and then immediately fill at whatever price is offered, since a market order attempts to buy at the best available price at the time.
I assume this opens the door wide open for someone to gouge me with no limit order in place. My question is this: by just how much can they gouge? Is there some sort of protection mechanism in place to prevent me from being completely ripped off by a huge mark-up of the stock price (IE: The stock is trading at $5 and the person offers it to me at $10)?
If that could happen, it'd almost be enough to make me never want to touch a market order again.