Bid
The highest price a buyer is currently willing to pay for an asset.
Also called: bid price · best bid
Written by Javier Sánchez Ros
In plain language
Every market is really two prices at once. The bid is the buying side: the best price someone has publicly committed to pay right now.
If you want to sell immediately, the bid is the price you get. You are not selling at "the price" you see quoted on a news site — you are selling into whatever buyer is standing closest to the market.
Bids sit in the order book stacked by price. The best bid is the top of that stack, and behind it are lower bids waiting in line.
Worked through
A stop at $30.00 with the bid sitting at $29.94
- Last traded price
- $30.02
- Bid
- $29.94
- Ask
- $30.02
- A market sell fills at
- $29.94
The chart shows $30.02 and that is the ask — the price someone will sell to you. Selling is the other side of the book, and the best available buyer is bidding $29.94. Eight cents lower, before anything has gone wrong.
This matters most on the exit, which is where the bid does its work. A stop set at $30.00 does not get $30.00; it gets whatever the bid is when the order becomes a market order, and on a thin book that is lower still as the order eats through the resting buyers.
So a risk calculation built on chart prices is optimistic on both legs — buying at the ask, selling at the bid — and the error is the full spread on every round trip. On liquid instruments that is a rounding error. On anything else it is a permanent tax that never appears in the plan.
Seen on a chart
Why it matters
The bid is half of your real entry and exit cost. A trade plan built on the last traded price rather than the bid and ask will consistently miss by the width of the spread.
Common mistakes
- Assuming you can sell at the last traded price. You sell at the bid.
- Ignoring how much size sits at the bid. A large sell order can eat through it and fill far worse than expected.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The lowest price a seller is currently willing to accept for an asset.
The gap between the bid and the ask — the built-in cost of entering a trade.
How easily an asset can be bought or sold without moving its price.
The live list of all resting buy and sell orders at each price level.
The difference between the price you expected and the price you actually got.