What is a bid and ask?

Bid and ask is a two-point price quotation that shows you the best price investors are willing to offer for a transaction. The bid is the highest price buyers are willing to pay for a financial security, such as a stock, at a given point in time. The ask is the price at which the investor is willing to sell the security.

What is the difference between ask price and bid price?

Ask is simply the price in a market at which an asset can be bought (i.e. the price at which it is being sold). The ask price is usually also quoted with the amount of the asset which the seller is prepared to sell. Ask is the opposite to bid and both terms are used in almost every single financial market across all asset classes.

What does a bid price mean?

In financial markets, the bid price serves as an indication of a potential buyer's willingness to pay for a security. For instance, if the bid price for a stock is $20, it means that a buyer is ready to purchase the stock at that price. The bid price forms an integral part of order books, reflecting the demand side of the market equation.