Community Forex Questions
Bid and ask: how does it works in trading?
When transacting, bid and ask are very important concepts that many retail investors overlook. The current stock price is the price of the last trade - a historical price. The bid and ask are the prices that buyers and sellers are willing to trade at. A bid represents the demand for a security, while an ask represents its supply.
If the current stock quotation includes a bid of $13 and an ask of $13.20, an investor looking to purchase the stock would pay $13.20. An investor looking to sell the stock would receive $13.
If the current stock quotation includes a bid of $13 and an ask of $13.20, an investor looking to purchase the stock would pay $13.20. An investor looking to sell the stock would receive $13.
In trading, the bid and ask prices play pivotal roles in determining the market value of assets, particularly in the context of stocks, currencies, and commodities. The bid represents the highest price a buyer is willing to pay for a security at a given moment, while the ask (or offer) is the lowest price a seller is willing to accept. The difference between the bid and ask prices is known as the spread, which reflects market liquidity and trading conditions.
When a trader initiates a buy order, they must pay the ask price, while a sell order is executed at the bid price. This bid-ask spread is where market makers and brokers profit. Tighter spreads indicate a liquid market, while wider spreads suggest less liquidity or higher volatility. Understanding bid and ask dynamics is crucial for traders to effectively navigate markets and execute trades at favorable prices.
When a trader initiates a buy order, they must pay the ask price, while a sell order is executed at the bid price. This bid-ask spread is where market makers and brokers profit. Tighter spreads indicate a liquid market, while wider spreads suggest less liquidity or higher volatility. Understanding bid and ask dynamics is crucial for traders to effectively navigate markets and execute trades at favorable prices.
In trading, the bid and ask prices show where buyers and sellers are willing to trade. The bid price is the highest price a buyer is ready to pay for an asset. The ask price is the lowest price a seller is willing to accept. The difference between them is called the spread, which represents the transaction cost of entering a trade.
When you place a buy order, it is executed at the ask price. When you place a sell order, it is filled at the bid price. A tighter spread usually means higher liquidity and lower trading costs, while a wider spread signals lower liquidity or higher market uncertainty. Understanding bid and ask prices helps traders manage costs, time entries better, and avoid confusion when orders are executed.
When you place a buy order, it is executed at the ask price. When you place a sell order, it is filled at the bid price. A tighter spread usually means higher liquidity and lower trading costs, while a wider spread signals lower liquidity or higher market uncertainty. Understanding bid and ask prices helps traders manage costs, time entries better, and avoid confusion when orders are executed.
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Jan 15, 2026 13:05
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Apr 18, 2022 21:11