Skewed quotes and what a dealer is really telling you
When a dealer holds a large position in one direction, the quotes tilt. The bid and ask might sit 0.3 pips below the market midpoint instead of centred around it. The spread looks normal, but the whole quote has shifted.
Why does this matter? The dealer is trying to attract flow in the opposite direction, to reduce inventory. A skewed quote is a hint about positioning.
On a retail platform, the signal gets mixed with the broker's own markup and feed aggregation, so seeing it clearly is hard. Still, on feeds from a single bank or a prime-of-prime provider, the skew shows up as a persistent offset relative to other feeds.
Some scalpers compare two feeds side by side. When one is persistently lower than the other on both bid and ask, it suggests positioning in that feed's source. The effect lasts anywhere from seconds to minutes.
It is an obscure edge and not an easy one to trade. As a cross-check on whether a move is real, it has value.
Has a persistent offset between two price feeds ever preceded a move on the faster one?
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Skewed quotes and what a dealer is really telling you
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