Definition of Bid Price
What is the "Bid Price"?
The bid price is the highest amount that someone is willing to pay for a stock at that moment.
If you visit quote.yahoo.com and type in a stock, you will be given a "bid price" and an "ask price".
The ask price is always higher than the bid price.
The bid price, as mentioned, is the most that someone is willing to pay for a stock at that moment.
The ask price, on the other hand, is the lowest price that a seller of a stock is willing to accept at that moment.
If you are looking to sell a stock and enter a market sell order, then that order will try to match your sell order with the best available bid at that time.
Example: You bought 5,000 shares of MSFT two years ago and are now looking to sell.
You need the money in order to purchase a vacation property. Time is of the essence, and you need to exit the position immediately.
You log into your online stock broker and notice that the best bid price is $22.05. You enter a market order to sell, and your order is filled within seconds at $22.05.
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