The term peg order refers to buying and selling at the best price. Primary peg orders help the investors to receive the best of both of the world, within the set boundaries. Peg orders are frequently used by the traders in the volatile market, because they provide the opportunities to fetch the best possible price when buying or selling the security.

online pegged orders

Peg orders can be classified as National Best Bid Offer (NBBO), it is the lowest price that the trader is willing to pay for scrip when selling the security and National Best Bid (NBB), and it is the highest price the investor is willing to pay for scrip when purchasing the security. The difference between NBBO and NBP is known as the spread.

The pegged orders are classified into different categories. The most common pegged orders are pegged to market order where the trader specify an offset amount which he is willing to pay above the best national bid or below it, pegged to mid- point order where the order is executed somewhere at the mid- point, pegged reserve order combines the salient features of the pegged order and reserve order.

If a trader wants to buy 10,000 shares of company ABC but he is not willing to pay more than $30 per share. The NBB is currently standing at $29.80, while NBO is at $30.39. The investor places a peg order with a limit of $30, it will not show the market value, instead when the NBO price meets the trade price of $30, a buy order is placed.

pegged order

Pros and cons
The peg orders can only be operated by an expert trader and it comes with a cost that cannot be ignored. So, if you are a conservative investor, stick to standard trading instruments.