The Bid, Ask, and Last are prices you’ll see on most online stock quotes. In a newspaper, or on TV, they will typically only show the Last price. These prices help you assess at which price you could buy or sell a stock. The Bid, Ask, Last also provide other information about the stock, such as its spread. In addition to the Bid, Ask, and Last prices, you’ll also typically see other other information on a stock quote. Here’s what all these trading terms mean.
Understanding the Bid Price in Stocks
For any transaction to the occur there must be a buyer and seller. If you go to an auction and buy a piece of art, in order for the painting to switch hands someone must buy it from the seller. Otherwise nothing happens. The same thing occurs in the stock market, but on a much larger and more frequent scale.
The Bid price shows the highest price someone is willing to buy a stock at, at this moment. The Bid is constantly changing as traders and investors jostle for position and react to new price information. In an actively traded stock like Apple Inc. (AAPL) the Bid price won’t stay in one place for long; it is constantly moving.
If you wish to buy or sell a stock, the current Bid price is an assessment of what someone is willing to pay right now. Just like the highest bid at an art auction lets the seller know what someone is willing to pay for a painting right now.
Since the Bid price is the (current) highest price someone is willing to pay for a stock, if another trader wants to sell, the seller could immediately sell their shares to the “bidder” (buyer) at the Bid price.
Are you new to trading? See 4 Common Questions from New Traders, Answered. It looks at the chances of success, income potential, how long it takes to succeed, and how to get started.
Understanding the Ask Price in Stocks
The Ask price shows the lowest price someone is willing to sell a stock at, at this moment. Like the Bid, the Ask price is constantly changing as traders and investors jostle for position and react to new price information. The Ask price will constantly change throughout the day as traders re-evaluate what price they are willing to accept for their shares (to sell).
If you wish to sell a stock, the current Ask price is an assessment of its current value. If you are selling your used car, you set an asking price. As negotiations get underway, and new information is revealed, your Ask price may change.
Since the Ask price is the (current) lowest price someone is willing to sell stock at, if another trader wants to buy, they could immediately buy from the seller at the Ask price.
The Ask price is also called the Offer price.
The Bid Ask Spread in the Stock Market
The Bid and Ask don’t necessarily reflect the “true value” of a stock or company. They simply show what other people are willing to buy and sell their shares at right now. 5-minutes, 1-week, and 1-year from now the price is likely to be quite different.
The Bid Ask Spread is the separation between buyers and sellers. If someone is willing to Bid in a stock at $10.50 but a seller is only willing to post an Ask price of $10.55, then the Bid Ask Spread is $0.05. In order for a transaction to occur, someone must either sell to the buyer at the lower (Bid) price, or someone must buy from the sell at the higher (Ask) price. Alternatively another bidder could put in a higher Bid, at $10.51 or $10.53 for example. Or another Offer could come in at $10.54, thus narrowing the Bid Ask Spread. For a more detailed look on the Bid Ask spread–a hidden cost in trading–see The Bid Ask Spread Explained.
Understanding the Last Price in Stocks
The Last price is the price at which the last transaction went through at. When a website provides stock quotes, without providing a Bid or Ask price, the Last price is usually being displayed. The Bid and Ask show what buyers and sellers are willing to reveal about their intention, but the Last price is a truer sense of the current value. For example, I may Bid at $10.50 hoping to collect some shares at that price, but really I am willing to buy up to a price of $10.60. If no one sells to my Bid at $10.50 I may purchase some shares from a seller at $10.55. My transaction at $10.55 creates the Last price. It also lets other participants in that stock know that someone is willing to buy at $10.55, even though the current Bid is only $10.50.
How Stock Prices Move Using Bid, Ask, and Last Price
Just because you know the bid or ask price doesn’t mean you can sell or buy an infinite amount of shares at that level. Just like you couldn’t buy 10 Picasso paintings at a great offer price when the seller only has 1 available. Each buyer and seller only has so many shares they are willing to acquire or buy at each price level. If the bid price is $10.50 and there are 500 shares at that level, that means a seller will likely only be able to sell 500 shares at $10.50. Selling more will likely require that they are willing to sell at a lower price. The next bid may be at $10.49, with 200 shares available. If the seller sells 200 shares to that buyer the Bid at that level disappears and the next highest Bid will become the current Bid…it may be at $10.48, or $10.45 or $9.80….it’s wherever someone is willing to buy shares. Before making any trades make sure you have a Trading Plan – this is your playbook for how you will navigate the ups and downs in price.
The same goes for the Ask price and buyers. If someone buys all the shares available at the Ask price, that Ask price disappears and the new Ask price is revealed. This is how prices move. Because there is only a finite amount of shares at each level, someone who wants to buy a lot of stock quickly may need to “bid the price up” in order to acquire their shares–removing all the shares from multiple Ask prices, pushing the price up. Someone who needs to sell in a hurry may push the price lower, as they sell all their shares to current bidders at lower and lower prices.
The price movement is how traders make their money. To see more how this works, see How Much Money Can I Make as a Day Trader.
Other Prices of Interest on a Stock Quote
In a stock quote you’ll also often see other information. Here’s what these other numbers/prices mean.
Previous Close: The last price of the day during the prior trading session. This lets you know if the price is currently higher or lower than it was yesterday.
Volume: How many shares have changed hands during the current session. For active traders, the higher the volume the better. High volumes means lots of buyers and sellers, so the Bid Ask Spread tends to be small (usually about $0.01) and you can exit positions with ease because there are shares at the Bid and Ask prices (keep in mind though, these change constantly, so while you can easily get out of a position it may not always be at the exact price you want).
Day’s Range – The highest and lowest price a trade has gone through at during the current session. For a strategy involving the daily range see The Daily Range Day Trading Strategy.
52-Week Range – The highest and lowest price a trade has gone through at during the last 52 weeks (one year).
Real-Time and Delayed Bid, Ask, and Last Prices
If you have a trading account, it should be providing you with real-time quotes. Type in a stock symbol in your trading platform to se the Bid, Ask, and Last prices, along with whatever other information your broker/trading platform provides.
Most free finance websites provide delayed stock quotes — the prices you see actually occurred 15 minutes ago. But, free financial sites have become better at providing real-time stock market prices. To see free real-time Bid, Ask and Last prices in stocks you can use the CBOE Equities…scroll to the bottom of the page and type the ticker symbol of the stock you want to look up in the “Booker Viewer.” This is a free resource and doesn’t show every Bid and Offer (on those coming in on the CBOE Equities exchange), but it does give you a good idea. It can also be helpful to watch the Book Viewer to see how the price of a stock moves as the Bid and Ask prices change throughout the day.
TradingView.com is a free charting website that shows stock prices moving (Last price) in real-time using data from CBOE Equities.
The figure below shows the book viewer. The red boxes show the current bid and ask prices, and to their left is how many shares are being bid/offered at those levels on CBOE network. You can also see the Bids and Asks which are above and below the current Ask and Bid. To right is a “time and sales” window, which shows the Last transactions–time, price, and quantity of shares.
To learn about more trading lingo, see Trading Terms Every Day Trader Should Know.
Bid, Ask, and Last Price – Final Word
The Bid, Ask, and Last prices represent the current value for a stock.
The same concepts apply to other markets, such as forex or futures.
The Bid price is what someone is willing to buy it at (or what they are “advertising” they want to buy it at). The Ask price is what someone is willing to sell at (or what they are “advertising” they want to sell it at) and the Last price is the last transaction price. There are only so many shares available to buy or sell at each price level, so those willing to buy or sell at the advertised Bid and Ask prices will move the price, creating a new Bid, Ask, and Last price, or at least altering the number of shares available to buy/sell at that level.
Cory Mitchell, CMT
If you are interested in learning a complete method of swing trading stocks (trades lasting a few weeks), including how to find trades, how to manage risk, where to enter, and where to exit, then check out my Stock Market Swing Trading Video Course. More than 12 hours of video show you how to swing trade efficiently and profitably, in about 20 minutes per day.