What is a bid?

When an investor wishes to buy a stock, they make an offer, listing the number of shares they wish to buy and the maximum price they are willing to pay.

The bid is different from the ask price, which is the lowest price the seller will accept.

When an investor wishes to buy a stock, they make an offer, setting out the number of shares they wish to buy and the price they are willing to pay. The bid is the opposite of the ask price, which is the price the seller is willing to accept. Please note that the bid or ask price is not necessarily the lowest or highest price, and an investor may offer multiple different asking prices.

Where have you heard the offer?

Bid and ask prices play a key role in trading securities such as stocks, helping potential buyers and sellers to make clear price expectations, and you will see two prices in the transaction. The highest price offered for a security at a specified time is the best bid.

Information you need to know about your bid

The difference between the bid and ask price is the bid-ask spread, which is an index of the popularity of the stock relative to the sell. A small spread indicates high demand for the security and high potential liquidity. Market makers earn the difference between the bid and ask prices by buying and selling specific securities.