Bid và ask

     

What is Bid và Ask?

The term bid & ask refers lớn the best potential price that buyers & sellers in the marketplaceTypes of Markets - Dealers, Brokers, ExchangesMarkets include brokers, dealers, & exchange markets. Each market operates under different trading mechanisms, which affect liquidity and control. The different types of markets allow for different trading characteristics, outlined in this guide are willing to lớn transact at. In other words, bid và ask refers khổng lồ the best price at which a securityPublic SecuritiesPublic securities, or marketable securities, are investments that are openly or easily traded in a market. The securities are either equity or debt-based. can be sold and/or bought at the current time.

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The Bid Price

The bid price is the price that an investor is willing to pay for the security.

For example, if an investor wanted to sell a stoông chồng, he or she would need to determine how much someone is willing khổng lồ pay for it. This can be done by looking at the bid price. It represents the highest price that someone is willing to lớn pay for the stoông chồng.

The Ask Price

The ask price is the price that an investor is willing lớn sell the security for.

For example, if an investor wants to lớn buy a stoông chồng, they need khổng lồ determine how much someone is willing to sell it for. They look at the ask price, the lowest price someone is willing lớn sell the stock for.

Understanding Bid và Ask

Bid & ask is a very important concept that many retail investorsInvesting: A Beginner"s GuideCFI"s Investing for Beginners guide will teach you the basics of investing and how to get started. Learn about different strategies and techniques for trading overlook when transacting. It is important to lớn note that the current stoông xã price is the price of the last trade – a historical price. On the other hvà, the bid và ask are the prices that buyers và sellers are willing to lớn trade at. In essence, bid represents the demvà while ask represents the supply of the security.

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For example, if the current stoông chồng quotationTickerA Ticker is a symbol, a chất lượng combination of letters and numbers that represent a particular stockor security listed on an exchange. The ticker symbol is used to lớn refer lớn a specific stochồng, particularly during trading. Trades are executed based on a company"s ticker symbols includes a bid of $13 and an ask of $13.20, an investor looking to lớn purchase the stochồng would pay $13.đôi mươi. An investor looking lớn sell the stochồng would sell it at $13.

Example of Bid & Ask

John is a retail investor looking lớn purchase stocks of Security A. He notices the current stock price of Security A is at $173 và decides lớn purchase 10 shares for $1,730. To his confusion, he noticed that the total cost came out to lớn $1,731.

John assumed that it must’ve been an error. He later realizes that the current stoông xã price of $173 is the price of the last traded stoông chồng of Security A and that he paid the asking price of $173.10.

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Considering the Bid-Ask Spread

The difference between the bid và ask prices is referred to lớn as the bid-ask spread. The bid-ask spread benefits the market maker và represents the market maker’s profit. It is an important factor lớn take into consideration when trading securities, as it is essentially a hidden cost that is incurred during trading.

For example, if a security received a bid of $10 and an ask of $11, an investor would expect lớn thua kém $1 or 9% of their investment if they bought at the asking price of $11 & then immediately changed their mind & sold at the bid price of $10.

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When the security is highly traded (liquid), the spread will be low. On the other h&, when the security is seldom traded (illiquid), the spread will be larger. For example, the bid-ask spread of Facebook Inc., a highly traded stoông xã with a 50-day average daily volume of 25 million, is one (1) cent.

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