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Bid Price Definition

trade or invest

In other words, if a seller wants to determine how much the market or a buyer is willing to pay for his product, it can be done by looking at the bid price which represents the maximum price a buyer is willing to pay. A bid price is a price at which one is willing to buy a security, an asset, a commodity, a service, or a contract. In many markets and countries, it is referred to as a “bid.” A bid can usually be placed lower than the offered price, also known as the “ask price” – which is the price at which the seller is ready to sell. The term “bid” refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The termaskrefers to the lowest price at which a seller will sell the stock.

project scope

If the quote indicates a bid price of $50 and a bid size of 500, that you can sell up to 500 shares at $50. The bid price is the amount of money a buyer is willing to pay for a security. It is contrasted with the sell price, which is the amount a seller is willing to sell a security for. The difference between these two prices is referred to as the spread. For instance, if the stocks are currently selling at £150 and your monetary limit is £120, set your bid price to your maximum budget. Once the ask price comes within your bid range you can then buy them at your desired value.

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Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd , IG Index Ltd and IG Trading and Investments Ltd are authorised and regulated by the Financial Conduct Authority. In this scenario, your decision to go short will have yielded a profit and you could close your position. To do this, you would reverse your trade and buy five contracts at the current offer price of $127.60. In other words, a bidding war is a situation where two or more buyers are so interested in an item that they make increasingly higher-priced offers in attempts to outbid others and win the ownership of the item. The bid represents the demand side, and the bid price highlights the price set by the buyer.

spread betting

For example, if an wants to buy a stock, they need to determine how much someone is willing to sell it for. They look at the ask price, the lowest price someone is willing to sell the stock for. The ask price is the price that an investor is willing to sell the security for. The current bid and ask prices more accurately reflect what price you can get in the marketplace at that moment, while the last price shows the level where orders have filled in the past. The last price is the most recent transaction, but it doesn’t always accurately represent the price you would get if you were to buy or sell right now. The last price might have taken place at the bid or ask price, or the bid or ask price might have changed as a result of, or since, the last price.

For example, a building contractor may chat with a client to understand the client’s needs. They’ll then briefly list the services and provide a rough idea of the labor costs and materials needed to fulfill the project scope. Finally, they’ll assign costs by gettingquotesfrom other suppliers.

When to Use a Quote

While in the real market condition, the perception remains so low that the bid price tends to lower. Bid size may be contrasted with theask size, where the ask size is the amount of a particular security that investors are offering to sell at the specifiedask price. Investors interpret differences in the bid size and ask size as representing thesupply and demandrelationship for that security. If there are multiple interested buyers, then a bidding war would be initiated, and the highest bidding price quoted by a bidder is considered the selling price.


The ask price is the lowest price that someone is willing to sell a stock for . Similar to all other prices on an exchange, it changes frequently as traders react and make moves. The ask price is a fairly good indicator of a stock’s value at a given time, although it can’t necessarily be taken as its true value. If the current bid on a stock is $10.05, a trader might place a limit order to also buy shares for $10.05, or perhaps a bit below that price. If the bid is placed at $10.03, all other bids above it must be filled before the price drops to $10.03 and potentially fills the $10.03 order. When a bid order is placed, there’s no guarantee that the trader placing the bid will receive the number of shares, contracts, or lots that they want.

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By solving this problem, online auctions reduce the transaction costs for bidders, increase the number of bidders, and increase the average bid price. When numerous buyers place bids, a bidding war might ensue in which two or more bidders place greater prices gradually. On the other hand, when the security is seldom traded , the spread will be larger.

  • For example, think of a government agency looking for a suitable contractor to complete a project.
  • In the bond market, you can see this difference in various markets.
  • The ask price refers to the lowest price a seller will accept for a security.
  • And index constituents have a little variation in bid-offer quotes.
  • An estimate may also include an accounting of taxes, overhead, subcontracts, and equipment costs.

Some contractors may also refer to this type of proposal as a “contract.” Others simply ask for a signature to acknowledge receipt of the proposal. A subcontractor might also submit a bid to a general contractor to perform a certain part of a project. Think of a framer submitting a bid to a general contractor for the framing work on a house. The framer’s bid, if he wins, then figures into the general contractor’s bid to build the entire home. A quote is a figure that a contractor gets from a supplier for the price of materials they need for a job. Discounted Market Price of Shares means, if the Shares are listed only on the TSX Venture Exchange, the Market Price less the maximum discount permitted under the TSX Policy applicable to Options.

You will often need to submit supporting information, including previous client testimonials to establish credibility, health and safety documents, and examples of past work. Potential clients will often provide you with details of what they expect in the proposal. They may also tell you to use your discretion to suggest solutions that will help them. Bids are common for larger commercial and government projects where the project scope is clear.

If, for example, a stock is trading with an ask price of $20, then a person wishing to buy that stock would need to offer at least $20 in order to purchase it at today’s price. The gap between the bid and ask prices is often referred to as the bid-ask spread. It’s important to note that a bid price is only true for the specified number of securities.

Legal Definition

As a provider of educational courses, we do not have access to the personal trading accounts or brokerage statements of our customers. As a result, we have no reason to believe our customers perform better or worse than traders as a whole. Level 2for the SPY and as you can see the bid price is currently at $224.68 with the top bid showing a size of 100. Send a quote when you have a firm understanding of the specific details and project costs involved. This means you may need to visit the site, speak to the client, and do additional research to get all the information you need to quote.

The will always bargain; the seller may sell at a lower price due to lower demand. The difference between these two prices is known as the spread; the smaller the spread, the greater the liquidity of the given security. The ask price refers to the lowest price a seller will accept for a security. In finance, a spread usually refers to the difference between two prices of a security or asset, or between two similar assets. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Quotes will often show the national best bid and offer from across all exchanges that a security is listed. That means that the best bid price may come from a different exchange or location than the best offer. Bids are made continuously by market makers for a security and may also be made in cases where a seller requests a price where they can sell.

The ask price represents the minimum price that a seller is willing to take for that same security. A trade or transaction occurs when a buyer in the market is willing to pay the best offer available—or is willing to sell at the highest bid. In the context of stock trading, the bid price refers to the highest amount of money a prospective buyer is willing to spend for it. Most quote prices as displayed by quote services and on stock tickers are the highest bid price available for a given good, stock, or commodity. The ask or offer price displayed by said quote services corresponds directly to the lowest asking price for a given stock or commodity on the market.

A higher bid price than the asking price indicates good stock and vice versa. However, in the real situation, the asking price always stays above the bid quote as the seller’s expectation from his stock is always more while the buyer always quotes a lesser price for the particular stock. If any seller offers the market bid price, or if any buyer bids the market asked price, a transaction is consummated between the seller and buyer whose prices coincide.

Estimates are an approximation and give clients an idea of what to expect. Quotes are more concrete and specify a fixed price for a specific time. Write your proposal by following a basic outline that includes certain critical elements of any successful proposal, such as social proof, a value statement, project investment, and polish for a professional look. Proposals are usually put together to win a client’s business at the start of a new relationship.

Sometimes, a buyer will present a bid even if a seller is not actively looking to sell, in which case it is considered an unsolicited bid. Most investors are more familiar with trading in the stock market than in the bond market. The concept of bid and ask yields might sound complex in theory. In practice, though, the figures give you an idea of what returns you can expect on a bond investment. The bid price is the highest sum a potential buyer is ready to pay in exchange for an asset.

Eventually, a price will be settled upon when a buyer makes an offer which their rivals are unwilling to top. This is quite beneficial to the seller, as it puts a second pressure on the buyers to pay a higher price than if there was a single prospective buyer. Generally, a bid is lower than an offered price, or “ask” price, which is the price at which people are willing to sell. The difference between the two prices is called a bid-ask spread​​​​​​​.

The Bid Price shall be quoted for performing the Contract strictly in accordance with the Technical Specifications. Find out more about spread betting, including what the spread is and how leverage works. Speaking of affordability, the bid at this writing is still shy of $7000 with five days to go. The Milwaukee Bucks are going to submit a bid to host either the 2025 or 2026 NBA All-Star Game, the Journal Sentinel confirmed Saturday night.

Together, the and ask make up the price quote, with the distance between the bid-ask spread an indicator of a security’s liquidity . Quotes will often also show the amount of the security available at both the current best bid and ask prices. Most retail traders and investors must sell on the bid or buy on the offer, while market makers set the bid and offer prices where they are willing to buy and sell. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value of the Common Stock as determined by the Board of Directors in good faith. In the context of stock trading on a stock exchange, the bid price is the highest price a buyer of a stock is willing to pay for a share of that given stock. The bid price displayed in most quote services is the highest bid price in the market.

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