Glossary
Bid price
The highest price a buyer is currently willing to pay for a security; sellers who want to trade immediately receive the bid.
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The bid price is the highest price that any buyer in the market is currently willing to pay for a security. If you sell with a market order, you will normally receive the bid. Together with the ask it forms the quote you see on any trading screen, and for a seller it is the most realistic answer to the question "what could I get for this right now?"
How it works
Buyers post limit orders at or below the price they are willing to pay. The highest of these across all US exchanges is the national best bid, the bid half of the NBBO. Next to it sits the bid size, the number of shares wanted at that price.
The last traded price can differ from both bid and ask. In a fast-moving or illiquid market, a stock's "price" of $10.00 might coexist with a bid of only $9.85, so the last trade is a poor guide to what a sale would bring.
Why the bid matters
- Liquidation value. Brokers and margin calculations often value positions closer to the bid than the last trade, especially for options.
- Depth. Bids below the best one form the buy side of the order book. A thin book means a large sale can push the price down quickly, called market impact.
- Signals. Short-term traders watch whether bids are being lifted or withdrawn, though large orders are often hidden or split.
Selling with a limit order at or above the bid lets you set a minimum acceptable price instead of taking whatever bid is there when the order arrives.