In stock trading, a bid is a price offered by an investor, trader, or dealer to purchase a security, commodity, or currency. It is the amount you, as a buyer, are willing to pay for a stock or other type of investment. The bid price is contrasted with the ask (or offer) price, which is the amount a seller is willing to accept for a security.
These figures help to determine the buying and selling process in the stock market. When companies or individuals want to purchase shares, they look at the bid price. This is the highest price that somebody in the market is willing to pay. If you’re selling, you’ll typically start negotiating slightly higher than the current bid price.
Bid prices are always lower than asking prices because buyers want to buy low and sellers want to sell high, creating an inherent spread in pricing. In summary, a bid represents the maximum price that a buyer is willing to pay for a share of stock or other security.
