Price Improvement

DEFINITION of 'Price Improvement'

Attaining a higher bid price, if you are selling a stock, or a lower ask price, if you are buying a stock, than the price quoted at the time your order was placed.

BREAKING DOWN 'Price Improvement'

You will often read in brokerage marketing pitches that price improvement is an opportunity and not a guarantee. Although most brokerages purport "fighting for that last 1/16" there is no guarantee of this actually happening.

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RELATED FAQS
  1. What do the bid and ask prices represent on a stock quote?

    Learn what the bid and ask prices mean in a stock quote. Find out what represents supply and demand in the stock market and ... Read Answer >>
  2. How do I place an order to buy or sell shares?

    Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ... Read Answer >>
  3. Should I enter a limit order to buy a position with a bid and ask that are far apart?

    Learn more about order types and why entering limit orders to buy a security may help to mitigate the impact of wide bid-ask ... Read Answer >>
  4. What do the numbers that follow the bid and ask numbers in stock quotes represent? ...

    When looking at stock quotes, there are numbers following the bid and ask prices for a particular stock. These numbers usually ... Read Answer >>
  5. When is a buy limit order executed?

    Understand how buy limit orders work, and factors such as the bid-ask spread and market volatility that traders must consider ... Read Answer >>
  6. If I buy a stock at $45 and I put a stop limit in to sell at $40, will I be guaranteed ...

    Not necessarily. This is, unfortunately, one of the problems with orders. If a stop order is established, it means that the ... Read Answer >>
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