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Glossary

Bid Price

The Bid Price is mainly devised to make an exact representation of an outcome from the one bidding. The Bid Price is always contrasted to the Ask Price as the difference between these two yields the spread. 

The market compels both investors and traders to buy at the current ask price and sell at the current bid price. On the contrary, investors and traders are allowed to sell at the asking price and buy at the bid price through limit orders.

For instance, Mr. Anderson is interested in investing by buying shares in a particular company. The stock trade ranges from $100-$150. However, Mr. Anderson wouldn’t settle buying shares at more than $120. He will place a limit order of $120 for shares in the company. This is referred to as bid price.

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