Bid and Ask Prices
The bid and ask are the two sides of a market quote: what buyers are currently willing to pay and what sellers are currently willing to accept.
The quote in plain English
The bid is the highest displayed price at which a buyer is currently willing to buy. The ask (or offer) is the lowest displayed price at which a seller is currently willing to sell. Together they form the inside market. A quote of $24.98 bid / $25.00 ask means the best displayed buyer is at $24.98 and the best displayed seller is at $25.00.
Why the two prices are different
Markets usually contain competing orders at many price levels. Buyers generally prefer lower prices; sellers generally prefer higher prices. The gap between the best displayed buyer and seller is the bid-ask spread. Highly liquid securities may often show a narrow spread, while thinly traded or volatile securities can display much wider gaps.
What happens when you trade
A marketable buy order generally interacts with available sell liquidity, beginning at the ask. A marketable sell order generally interacts with available buy liquidity, beginning at the bid. A limit order can instead rest at a chosen price and wait for another participant to trade with it. This difference is central to understanding execution cost.
Displayed size is not the whole market
Quotes show visible interest, not every possible buyer or seller. Orders can be cancelled, new orders can arrive, and some trading interest may not be displayed in the same way as regular lit-book liquidity. Treat the quote as a live snapshot rather than a promise of what will be available milliseconds later.
Beginner mistakes
- Looking only at the last traded price and ignoring the current quote.
- Assuming the ask is the guaranteed fill price for a large market buy.
- Confusing a tight spread with low overall risk.
- Reading one quote without considering volume, volatility and available size.
Common questions
Is the last price the same as the bid or ask?
Not necessarily. The last price is the price of the most recent completed trade; the bid and ask describe the best current displayed buying and selling interest.
Can the bid and ask change without a trade?
Yes. Participants can add, cancel or modify resting orders, so the quote can change even before another transaction occurs.
Example: reading a live quote
A stock shows $31.24 bid for 800 shares and $31.27 ask for 500 shares. The three-cent gap is the spread, while the displayed sizes indicate only the visible interest at those best prices. If a buy order is larger than 500 shares, the remaining quantity may need to execute against higher ask prices unless new sellers appear.
Source discipline
Market structure details can vary by security, venue, broker and order-routing arrangement. For formal rules and current exchange procedures, use primary sources such as the SEC, FINRA and the relevant listing/trading venue. See our Sources & Methodology.