What is a bid and ask?

The term "bid and ask" (also known as "bid and offer") refers to a two-way price quotation that indicates the best potential price at which a security can be sold and bought at a given point in time. The bid price represents the maximum price that a buyer is willing to pay for a share of stock or other security.

What is a bid price?

A bid price is a price for which somebody is willing to buy something, whether it be a security, asset, commodity, service, or contract. It is colloquially known as a “bid” in many markets and jurisdictions. Generally, a bid is lower than an offered price, or “ask” price, which is the price at which people are willing to sell.

What does ask price mean?

The ask price represents the minimum price that a seller is willing to take for that same security. 1 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.

What happens if your bid is the highest?

If your bid is the highest, you will be the one who gets that asset. Most prices you will see on exchanges and price aggregators are equal to the highest buying price available for that asset. The bid price is the highest price that a market participant is willing to pay for any given asset.