Portfolio valuation

What are they using for valuation?
Buy middle or sell?
Whoever answer this Thank you for your very valuable time!

Charts, position valuations, and profit/loss are based on Last Trade Price (LTP).

More information can be found in this article. :v:

I know it’s based on the last trade price, which though? Bid Offer or middle?
On Hargreaves Lansdowne my valuations are based on the selling price. So it’s accurate because the spread is a cost.

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There is no bid/ask for the LTP. The LTP is just that: the last price for which the securities were traded at.

The bid/ask, or middle, refer to standing (open) orders in the order book, specifically the best price at which someone is openly willing to buy or sell the asset. The middlepoint is just the average between the two.

When a trade happen, a buyer is being matched with a seller, and the price they exchange at is the same.

This is wrong

I cannot sell a share at the same price i bought it at.
I can sell TENT at 69p and buy it at 71.5p (end of price)
If I buy on Hargreaves Lansdowne at 71.5 they will value the shares at 69p each. Because thats the price i can sell them at.
Just to explain it to you a little bit further the 2.5p difference is the market makers spread.

Hence the question at what price are the shares being valued at.

Apologies, but you are indeed mistaken.

The shares are valued at the last traded price.
This is the price both the buyer and the seller agreed on when they last transacted.

The spread only exists for the open book. If there was a spread of 0, then a trade would happen, since there are both people agreeing to buy and sell shares at the same price.

Most of (on market) activity is matching open orders (limit orders, standing in the order book) against incoming market order (order consuming the best available price). This creates a transaction, and a traded price, which is the same for both parties.

If i bought TENT at 71.5p could i also sell at the same price at the same time?
If so why did trading 212 buy more shares than i wanted and promptly sell the excess for 2.5p less?
Market makers aren’t charities.

Here, do you see 2 prices or just one listed for any trade?


A trade is a match of a buyer and a seller at one price.

The spread is the existing gap between the highest bid and the lowest ask in the order book.

Market makers are not allowed to inflate that price, as even if your trade doesn’t hit the exchange a retail broker must ensure best execution (best available price) to their clients. It is illegal to inflate the price (although that is not the case for CFDs).

If there would be a buyer for you to sell your shares immediately at the price you’ve just bought them, then yes, you could sell them right away at the same price.
But that would be unlikely, since the highest bid was already lower, and you’ve consumed the next price higher. A market Sell would then consume the highest bid, which is, unsurprisingly, the spread amount lower.

In both transaction, the initial seller and the later buyer who matched against you got the same price than you did.

Here, for your beloved TENT.

In the lower section of the page, you will also see the “Last 5 trades”. They also have only one price, and as you can see, even if the trade is executed off-exchange.

Where you are right, to some extent, is that many quotes are indeed provided by market makers.

And in certain very illiquid markets, if market makers dare joining those (most market makers will stay out of markets with extremely poor liquidity, as it may be a business suicide), then it is entirely possible that they fully choose the prices of one side (either the bid or the ask side).

In some other market, say the Leverage Share or Granite Share leveraged products, and equivalently in ETFs market, the sponsoring bank will act as a market maker, and will provide bounding for the price. For funds with little activity, it may mean that both the bid side and ask side are fully provided by the market maker.

In those cases, yes, the same MM decides of which price you buy and sell if you only use market orders.

But most of the quoted prices are not resulting of market makers. It is true that market makers make their money via the spread, but it is in fact not a fee that you necessarily pay, as they are only offering the prices already available elsewhere. Sometimes better even.


Bid / Offer

69.00 / 71.50

Yes. This are the prices available on the order book.

There is a standing bid price, and ask price. These are open orders.

Once more, this is different from the LTP, the Last Trade Price.

If you were to sell a share, you would sell it for 69.00, and whoever is matching you would buy it for 69.00, as it is the price they’ve indicated they were willing to buy it at.

And the LTP would be 69.00.

If you were to buy a share, you would get 71.50, the counterparty would also get 71.50, and the LTP would be 71.50.

Your initial question was “which price is used by the portfolio valuation?”
Well, it is not the bid, the ask, or the middle, but the LTP.

What Is the Market-Maker Spread? Definition, Purpose, Example.

No they wouldn’t. The counter party would get 69p

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I’ve literally given you 2 links of the actual trades on the actual exchange showing you there is only one price being traded at.

Anybody else wanna get a try? I can’t think of an other way of explaining it here.

If a buyer pays $X for a share, the seller will get $X. If the seller gets less, that means there is a missing amount of money, where would it go?

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The market maker

The man who takes all the risk

So, when you buy TENT at 71.50, and your counterparty is an other retail investor - according to you, he gets 69.00, and somehow the MM makes 2.5?

Now, what happens when your counterparty is the MM? What price do they get then?

Every time i trade on Hargreaves Lansdowne it gives me a buying and selling price. Its called the spread the market makers share of the trade.
The market maker buys at 69 and sells at 71.5
He keeps the difference 2.5p assuming nothing has changed.

It compensates him …hopefully for the following

The EMS or exchange market size is the minimum number of shares that a market maker is obliged to quote a firm two way price on the trading system . This does not ensure the price is equal to the market quoted price at that time.

To sum up if market maker doesn’t have buyer for shares he has bought it makes no difference he must buy them.
If he doesn’t have shares to sell to a buyer he still must sell them.

In both cases he has to adjust the price he is willing to buy or sell at untill he finds a buyer or a seller.
This is the point of a stockmarket as opposed to the over the counter market.

Alright, let’s first keep it simple.

The exchange organizes trades. They have an order book (where they write up LIMIT buys and sell, that are set at a specific prices, and the book orders both sides by “best price” to worst price (for the potential counterparty).

The difference between the best bid and ask is the spread.
All these trades posted are from all and any investors, including maybe you.

The exchange charges a posting fee (think: a flat fee when submitting the trade).

Now, investors generally can’t post trade directly to the exchange. Brokers are doing the connection; T212 here, or Hargreaves Lansdowne for example.

The prices they give you is just relaying the current prices in the market (exchange).

When you come in with a MARKET buy order, your broker will transfer it to the exchange, and it will get executed against the best available Ask price (selling side).
At this unique price, a trade is executed and recorded. The Bid (buying side) is unaffected; the Ask may move up, if the order consumed the entire available supply of shares at this price, and the LTP is formed, with that unique trading price.

Now, Let’s introduce Market Makers.
They can intervene in two ways:

  • Firstly, they will just be regular investors in the market. They publish orders on the order book, like any regular investors.

Whenever you trade, maybe you will sell/buy against a MM, or maybe not.

Do understand please that the MM in this case is just a regular investor, and cannot magically extorts money out of any transaction happening.

  • The second way, the MM will connect to the market on one side, but brokers will connect to the MM on the other. The MM will keep a supply of share, and match any order they receive from the brokers.

In this case, from your broker, the MM is the sole counterparty. In effect, they will get to keep the spread for any and all orders coming through; but they still have to offer the market prices, or better.

The business model of a MM is to stay market neutral, and not have any market risk. In reality, they do carry some market risk. They are compensated mostly for providing liquidity, and a little also for potential risks.

→ In any case, while under certain conditions MMs will pocket the spread, for the most part, the spread is not a fee from MM; even without MM there would still be a spread.
And when a trade happens, there is only one price, for both parties of the transaction.

Last point about MM’s fee: empirical researches do prove evidence of spread reduction by the presence of MMs in a market. Providing liquidity reduce available spread to investors; without them, not only would the spread still exist, but it would actually be worse.