You head over to one of the stands and see a baseball card that you want. Instead, you want the best lowest price for it. Introduction to Income Statements. You can choose to to raise your bid, wait for the seller to drop his ask or go find another seller.
This is exactly how bid and ask work on the stock market. What that price actually refers to is the last price that it was traded at. The stock market has bid and ask prices for each and every stock.
You can find this on the stock quote page on WallStreetSurvivor. The bid is the price someone is willing pay for a share of Google. Look at the bid price. Mark down the bid price from the quote page, and check out what price your sell order is filled at. The ask is the price someone is willing to sell a share of Google for. So have a look at the ask price. So if you wanted to buy Google right now, you could buy it for that price. Imagine having a full-time stock broker sitting there watching the market, poised to buy or sell stock as soon the price reaches a certain level.
In particular, orders can be classified according to the price at which the broker will execute them: Market orders are orders for buying or selling at the current market or best available price in order to get the transaction done immediately.
Doing so will ensure that your order is immediately executed because the current ask price is the lowest price at which people holding shares of Google or just about any other stock are currently willing to sell at. A limit order, on the other hand, is one where you set a limit regarding the price at which you want to transact a stock.
In the two examples above, the buyer and the seller had no choice but to trade at the listed bid and ask price. But in practice you have the ability to choose your bid and your ask using limit order Note: Look at the Google quote above.
If you wanted to buy Google, you would look at the ask price. The opposite is true if you wanted to sell a stock only at a certain price.
You would set a limit sell order, and wait till the BID price reached it. So there you have it — bid and ask, explained. Understanding the basics of bid and ask are important to help you understand exactly how trades are processed. So next time you make a trade, remember: Try the WSS course: Understanding Advance Technique to learn more about Bid and ask prices, as well as other advanced trading techniques.
Wall Street Survivor Blog. Team Wall Street Survivor - November 23, 0.More...