What is Bid Price?

By Research Desk
about 5 years ago

Bid price means the highest price a buyer is willing to pay for purchasing a security. It is also sometime referred to as ‘bid’. The bid size is the amount of shares the investor is willing to purchase at the bid price.

Bid is one part of the trade; other being ‘ask price’. Thus in bid and ask, the bid price is in contrast to the ask price. The difference between the two is called the bid/ask spread.

If liquidity is low, the bid ask spread is very high, thus increasing cost of trade, and conversely for stocks with healthy trading volumes, bid-ask spread is minimum.  

E.g. For a stock like Infosys, the bid price on NSE today is Rs. 3,908.95, as can be inferred from the below snapshot of the orderbook:

Order Book of Infosys (on NSE on 16th Oct 2014 12.30PM)

 

Buy Qty.

Buy Price

Sell Price

Sell Qty.

40

3,908.95

3,909.00

4

22

3,908.80

3,909.05

18

1

3,908.75

3,909.50

1

19

3,908.60

3,909.75

6

23

3,908.55

3,910.00

10

50,352

Total Quantity

64,853

 

The ask price is Rs. 3,909.00 while bid-ask spread is 5 paise, which is the minimum as per exchange regulations. The big quantity for this trade is 40 shares while ask quantity is 4 shares.

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