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What Does "Away from the Market" Mean?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 10 November 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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"Away from the market" is a term that is used to describe a situation that occurs when there is a difference between the bid/ask spread and the current price in the marketplace for a given investment. This type of situation exists when the bid on the order for that security is lower than the current market price, or when the ask price or sell order is more than that market price. The term itself means that the orders associated with the investment are not in line with the current price on the market, and are thus away from that market price.

The fact that an order on a particular security is away from the market does not necessarily mean that choosing to buy that security is a poor strategy. In fact, actively looking for away from the market quotes on certain investments that carry some potential for growth in the future may be a very good idea. For example, if the current ask price is slightly more than the current market value, but that security can reasonably be expected to increase significantly in value over the next year or so, paying that higher price now may pave the way for substantial returns later on. By the same token, if the bid price is lower and the owner chooses to accept that bid, the new owner will see a return on the investment immediately.

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Since away from the market essentially means that an order associated with a given investment is not in line with the current market value, investors will want to assess the future potential of that security in detail. Attention should be given to why that asset is at the current market price, which means reviewing the past performance of that security. At the same time, accurately projecting the future movement of the security based on the stability of the company issuing the asset and the anticipated direction of the marketplace is also very important. From there, it is possible to ascertain if the away from the market order should be acted upon, or if the investor would do well to turn his or her attention to other investment opportunities.

The right type of away from the market opportunity can provide significant benefits to a buyer. Many brokers are very astute when it comes to identifying these types of investments and matching them with the investment preferences of their clientele. As with any type of investment activity, choosing to act upon an away from the market order does carry some degree of risk, but also has the potential to generate returns that are considered in line with that risk.

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