What is Bid and ask?
Bid va ask
In short
Bid is the highest price buyers are currently willing to pay; ask is the lowest price sellers will accept.
Every stock has two prices at the same moment:
- Bid — the highest price buyers are currently willing to pay. If you sell right now, that is what you get.
- Ask (offer) — the lowest price sellers are asking. If you buy right now, that is what you pay.
The ask is always above the bid, and the gap between them is the spread. Size is often shown next to the bid and ask: how many shares are on offer at that price. This is the top line of the order book.
How it differs from the last price
The price on the chart is the last executed trade. It may sit between the bid and ask or on one of them, but that does not mean you can trade at exactly that price. A market buy fills at the ask, a market sell at the bid.
Why it matters
- A hidden cost on every trade. Buy at the ask and sell at the bid, and you lose the spread even if the price has not moved at all.
- A liquidity gauge. A tight bid-ask with large size marks a liquid stock. A wide gap with small size means caution.
- Where to put a limit order. A buy limit near the bid avoids paying the spread, but the fill is not guaranteed.
The midpoint between bid and ask (the mid) is often used as the stock's "fair" current price.
Example
In a fictional stock:
- Bid: $19.98 × 500 shares
- Ask: $20.02 × 300 shares
- Midpoint: ($19.98 + $20.02) ÷ 2 = $20.00
You send a market buy for 100 shares: 100 × $20.02 = $2,002. You immediately change your mind and sell with a market order: 100 × $19.98 = $1,998.
The price did not move by a cent, yet you lost $4 — the spread ($0.04) × 100 shares. Had you bought 500 shares, the 300 at the ask would not have been enough and the remaining 200 would have filled at the next, higher price.
Mistakes and tips
Before placing an order, look at the bid and ask, not the last price — they determine what you actually pay.
Compare the size shown at the bid/ask with your order size: if it is not enough, the price will move against you.
In extended hours the gap between bid and ask is much wider than usual — use limit orders.
Frequently asked questions
- Can I buy a stock at the bid price?
- Not with a market order — it fills at the ask. You can place a limit order at the bid and wait, but if the price never comes to it, the order will not fill.
- Why do the bid and ask change so often?
- They update every second as thousands of participants place, cancel and execute orders.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
- What a stock is and why its price movesA stock is a real slice of a business. IPOs, market cap, how price forms, where returns come from, and the risks.Open lesson · 11 min
- How the US market worksExchanges and brokers, sessions in Tashkent time, spread and liquidity, five order types with examples, T+1, costs and fractional shares.Open lesson · 12 min
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