| Bid, Ask, And Size | | | | changed because there was an order that came |
| When you enter an order to buy or sell a stock, | | | | in ahead of yours and wiped out the bid or offer. |
| you see the bid and ask for a stock and some | | | | Then the stock moves to a new level and the bid |
| numbers. What are the bid and ask, and what do | | | | and ask will be different from what your screen |
| those numbers mean? One, the bid, is what you | | | | showed when you entered the order. This doesn't |
| need to know when you are selling a stock. The | | | | happen very often, but it does happen. And when |
| other, the ask (or offer) is what you need to | | | | investors enter their market orders (meaning |
| know when you're buying. But you also need to | | | | they will buy or sell stock at the market, no |
| know those numbers. Here's how it works: | | | | matter where the market for the stock is), look |
| If an investor looks at a computer screen for a | | | | at the bid or ask, and then see their execution |
| quote on the stock of XYZ, it might look | | | | price is different from the stock prices they saw, |
| something like this: Last: Bid: 20 Ask: 20 1/4 BSize: | | | | they have to realize that stocks can be very |
| 12 ASize: 5. The translation: the stock of XYZ is | | | | dynamic, sometimes changing just as their orders |
| being bid at $20 a share and offered at $20 1/4 | | | | are entered. |
| per share. There are 1200 shares bid for and 500 | | | | Another bit of jargon: the words ask and offer |
| shares offered. If you are looking to sell stock, | | | | are the same thing. This is the side of the market |
| now you know there is a firm willing to pay | | | | where investors can buy stock. So when you |
| (that's the bid side of the market) $20 for your | | | | hear: Where's the stock offered? Or what's the |
| stock, and that you could sell at least 1200 shares | | | | "ask" on the stock? They're both asking the same |
| of stock at that price. Those are the two parts | | | | thing. |
| of the bid side of a market on a stock: the price | | | | The size of the market can help you decide on |
| and the quantity of shares at that price. | | | | the timing of your purchase or the price. For |
| If you are looking to buy XYZ stock, you would | | | | example, if good old XYZ is trading at $20, and |
| have to pay $20.25 and could buy at least 500 | | | | the bid size for the stock is 200 and the offer |
| shares of stock. Again, there are two parts to | | | | size is 5, that means there are 20,000 shares bid |
| the ask side of the market: the price at which | | | | for and only 500 for sale (when you see the |
| you can buy stock and the amount of stock you | | | | amount of stock bid for or offered, just multiply |
| can buy. | | | | it by 100 for the actual amount of stock. If you |
| When you look at a quote for a stock, it's only | | | | see 999, that means there are at least 100,000 |
| good for the time at which you check it. The bid | | | | shares). If you're looking to buy the stock, you |
| and ask and the sizes for each side change | | | | might want to get your order in quickly because if |
| constantly. If you were to check back in two | | | | the buyer of the 20,000 shares gets excited and |
| minutes and you'd like to sell your XYZ at $20, | | | | starts to buy all the stock around, no matter |
| the $20 bid may not be there because the stock | | | | what the price, it will push up the price. On the |
| may have moved up or down in that time frame. | | | | other side of the trade, if you are a seller, you |
| So each time you trade, you'll need to check the | | | | may want to wait a little while because that kind |
| bid and ask to see where your particular stock is | | | | of size to buy suggests that maybe the price will |
| trading. | | | | be moving up if the buyer doesn't have patience |
| Whenever you enter an online trade, a "live" | | | | and wants that XYZ stock NOW. |
| quote will be shown so you'll know where the | | | | Of course, the buyer may not move from the |
| stock is trading and what to expect if you buy or | | | | $20 price, or may find another stock that is more |
| sell your stock. However, be aware that the | | | | attractive and buy that one instead. So you can't |
| stock can move very fast and that you may not | | | | know with certainty what will happen with the |
| get the price shown on your screen. That's | | | | stock's price. But then, except for death and |
| because by the time your order is sent to the | | | | taxes, certainty just isn't part of life or investing. |
| floor to be executed, the bid and ask may have | | | | |