Bid Price Definition

Definition

The word bid price can be utilized to refer to the purchase price at which an investor is ready to obtain a security. The bidding price may be that the converse of this request cost, that’s the purchase price an investor is prepared for when buying security.

Explanation

Bid and ask prices are of prime value into the stocks market in addition to other financial tools, simply because they educate investors the costs in which an investor is ready to purchase or sell a security. Both of these values are quoted as a set, with all the bidding price always function as decrease value. The gap between both of these values is referred to as the bid /ask spread.

When an investor places a market order to get a securitythey have been telling their broker to get the purchase at the best available price. As a way to give the customer with a close instantaneous buy, the cost for your own security are the request cost.

Alternatively, the buyer can define an amount at which they’re eager to buy the security. By way of instance, the investor could set a limit order using their broker, that would have been an amount below the market price of their security. In the event the cost of the collateral were to decline, and also the industry ‘s bid price for your collateral reaches lower compared to invest or ‘s bidding price, then your trade can be implemented.