Ask and Bid

 

What Does Ask Mean?

The price a seller is willing to accept for a security, also known as the offer price. Along with the price, the ask quote will generally also stipulate the amount of the security willing to be sold at that price.

 

What Does Bid Mean?

1. An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased.

2. The price at which a market maker is willing to buy a security. The market maker will also display an ask price, or the amount and price at which it is willing to sell.

 

What Does Best Bid Mean?

The highest quoted bid for a particular stock among all those offered by competing market makers.

 

What Does Best Ask Mean?

The lowest quoted ask price for a particular stock among those offered from competing market makers.

 

What Does Bid Size Mean?

The number of shares being offered for purchase at a specified bid price, that a buyer is willing to purchase at that bid price. For example, if an investor wants to buy 200 shares of Company ABC at $10 per share, the bid size is 200 shares. A stock exchange would then quote this bid size in the hundreds, so the bid size for Company ABC would be two.  If the bid size was 500 shares, the bid size quote would be five.

 

What Does Ask Size Mean?

The amount of a security that a market maker is offering to sell at the ask price. The higher the ask size, the more supply there is that people want to sell. When a buyer seeks to purchase a security, he or she can accept the ask price and buy up to the ask size amount at that price. If the buyer wishes to acquire more of the security over the current ask size, he or she may have to pay a slightly higher price to the next available seller.

 

What Does Bid-Ask Spread Mean?

The amount by which the ask price exceeds the bid. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it.

 

When trader wants to open a deal at Forex market he/she should know the currency pair as well as the price of this pair. At Forex market the price of the currency pair is denotedby two symbols Ask and Bid, which has the specific digital notations.

 

Ask-price is the highest price in the pair's quotation; for this price the trader buys the currency, which is the first in the abbreviation of the currency pair. In this case, trader sells the currency, which is the second in the abbreviation.

 

Bid-price is the lowest price in the quotation of the currency pair; for this price the trader sells the currency, which is the first in the abbreviation of the currency pair. Respectively, trader buys the currency, which is the second in the abbreviation.

 

Let's consider an example

 

We have the currency pair EUR/USD with the quotation 1.3652/1.3655. This means that you can buy 1 euro for 1.3655 dollars or to sell 1 euro for 1.3652 dollars. The difference between Bid price and Ask price is called spread. Spread is a payment for the opportunity to trade at Forex market, so called commission of the brokerage firm. Spreads are very small at exchange market; they are ten or even hundred times smaller than the banks spread. For the most part of the major group, spreads amount to 3 points.