Ax

DEFINITION of 'Ax'

The market maker who is most central to the price action of a specific security. The ax can be identified by spending several days studying level II quotes and noting which market maker seems to have the greatest effect on the security's price.

BREAKING DOWN 'Ax'

Identifying the ax is a common strategy among day traders, and trading in the same direction as this market maker can drastically increase a trader's odds of making successful trades. Any given stock can have several market makers, and the ax for any given security can change every day. It may take a trader several days to determine which market maker is primarily controlling the action of a certain stock.

RELATED TERMS
  1. Indicative Quote

    In forex trading, a currency quote that is provided by a market ...
  2. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain ...
  3. Level 2

    A trading service consisting of real-time access to the quotations ...
  4. Third Market Maker

    A third-party securities dealer that is ready and willing to ...
  5. Normal Market Size

    A share classification structure based on the number of shares ...
  6. Trade Or Fade Rule

    An options exchange rule that requires the market maker to either ...
Related Articles
  1. Trading Systems & Software

    Introduction To Level II Quotes

    Level II quotes show a ranked list of the best bid and ask prices from each market participant, providing detailed insight into a stock’s price action.
  2. Retirement

    Electronic Trading: The Role of a Market Maker

    Market makers compete for customer order flows by displaying buy and sell quotations for a guaranteed number of shares. The difference between the price at which a market maker is willing to ...
  3. Professionals

    Introduction

    In addition to the requirements to become a market maker, firms must follow strict guide- lines when acting as a market maker. Market makers must adhere to all rules relating to their participation ...
  4. Retirement

    Electronic Trading: Level I, II and III Access

    There are a variety of ways in which Nasdaq quotes security prices to the public. These levels vary on the amount of information and access they provide to investors. Level I This type of quote ...
  5. Professionals

    Market Maker Responsibilities

    Series 55
  6. Professionals

    Over-The-Counter (OTC) / Negotiated Markets

    FINRA Series 6 Exam Study Guide - Over-The-Counter (OTC) / Negotiated Markets. In this section: Market Makers who are OTC dealers, buy and sell a minimum number of shares of a specific security ...
  7. Professionals

    Withdrawing Quotes

    There are two ways that a market maker may withdraw their quotes for a security. A market maker may withdraw their quotes either on a voluntary basis or on an excused basis. If a market maker ...
  8. Professionals

    Piggybacking A Quote

    If an OTC BB security has been quoted by another dealer for a minimum of 30 days, they may simply enter their own quote by piggybacking the current dealer’s quote so long as: The security ...
  9. Professionals

    Dominated And Controlled Markets

    FINRA’s 5% mark up policy is a guideline for charging mark ups and commissions for transactions in securities with active and competitive markets. Some small OTC securities do not have ...
  10. Investing Basics

    Role Of A Market Maker

    A market maker is a firm or an individual that stands ready to buy and sell a particular security throughout the trading session to maintain liquidity and a fair and orderly market in that security. ...
RELATED FAQS
  1. What is the difference between a broker and a market maker?

    A broker is an intermediary who has a license to buy and sell securities on a client's behalf. Stockbrokers coordinate contracts ... Read Answer >>
  2. Is an earnings surprise priced into the opening value by market makers or does the ...

    An earnings surprise is an event where the earnings of a company are greater or lower than the predictions put forth by analysts, ... Read Answer >>
  3. What's the difference between a Nasdaq market maker and a NYSE specialist?

    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
  4. What are the steps to get a company listed on the OTCBB?

    The over-the-counter bulletin board (OTCBB) is a regulated quotation service for over-the-counter (OTC) securities. The securities ... Read Answer >>
  5. How do I buy an over-the-counter stock?

    The process of purchasing over-the-counter (OTC) stocks is different than purchasing stock from companies on the NYSE and ... Read Answer >>
  6. What is the difference between a quote driven market and an order driven one?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center