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.

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.