What Is a Bid Price in Stock Trading?

When stocks are traded on any stock exchange, a buyer and a seller are involved. Both the buyer and the seller hope to get the best price possible. A bid price is the price a specialist or a trader is willing to pay to buy a security from a customer.

Bid Price

When a customer is selling a stock, a broker (trader) will buy it at a specific price. That price is called the bid price.

Ask Price

When a customer wishes to buy a stock, a broker will sell it for a price. This is called the ask price.

Quotes

Stocks are quoted in bid and ask prices. Customers will find the lower quote is usually the bid price (the selling price) and the higher quote (the buying price) is usually the asking price from a broker/trader.

Considerations

Negotiating a bid/ask price is done frequently by bidding or asking higher or lower than the current bid/ask. Customers, brokers, and traders all engage in bidding/asking.

The Spread

The difference between the bid and the ask is called the spread. The more volume and the more a stock is traded, the narrower the spread. This makes getting the bid or the ask price more attainable.

Selling

When selling a stock, a customer will receive the bid price. A sell limit order at the bid price will often trigger a sale and an execution for a customer.

References

• Difference Between Bid/Ask
• Bid/Ask Spread