The bid price is the highest price a buyer is currently willing to pay for a security—whether it’s a stock, option, future, or crypto. It’s one half of the market quote, paired with the ask price, which is the lowest price a seller is willing to accept.
📈 Example:
If you’re looking at a stock and see:
- Bid: $24.50
- Ask: $24.55
That means:
- Buyers are offering $24.50
- Sellers want $24.55
- The spread is $0.05
🧠 Why It Matters:
- Liquidity: A tight bid-ask spread usually means high liquidity.
- Execution: If you place a market sell order, it’ll likely fill at the bid price.
- Market Sentiment: Rising bid prices can signal bullish pressure.
Tracking how the bid price moves in relation to volume and time can help you spot momentum shifts or inefficiencies—especially in thinly traded assets or during pre-market hours.