I for one never put in market orders, but frankly I almost never buy less than 1000 shares, and often 10,000 or more. If the bid is $.4878 and the ask is $.4883 I'll either put my limit at $.489 or just $.49. Most of the time I find that I've bought the shares for something slightly under the $.4883, but do I really care that much. It's $4883 for 10K shares at the lower price, or $4900 at my higher offer, a $17 difference, that's pocket change, I frankly wish that we weren't even trading at tenths of a penny, yet alone hundredths. When a 1/32 of a dollar was about the smallest spread between bid and ask, and most spreads were 1/8th or 1/4, we didn't have the sort of trading we have today with computers, and I suspect that if the rules were changed, computers would still be used for trading, but not nearly as much churn. It's rare that my orders don't fill in bidding this way, but if a stock is rapidly moving up I may ultimately raise my bid. A market order gives the MM's a chance to play, if in the above example they get $.53 for the shares you bought, that's a $400 difference, more than pocket change.
We've all seen the MM's drop the price $.02 or more on the last order of the day, under the right circumstances they can do the same thing on buying, or selling with a market order any time during the day. I don't attempt to watch all the trading, but even if you do, at times you hardly see a new high, or low for the day as MM's play games with a single market order than immediately back to where trading was previously. As the stock price goes higher they can play games at much higher values.
Computers can make money with many trades with tiny spreads, I won't say people can't, but computers are at a huge advantage. We really don't need the tiny spreads, a step backwards would be a step in the right direction.
Gary
Bullish
