The bid price in financial trading is the highest price that a buyer is willing to pay for a particular asset, such as a stock, currency, or commodity. Thus, it is the price that the asset seller can expect to receive. The bid price is also known as the sell price or the offer price.
If a stock had a bid price of $20, this is the price that buyers in the market are willing to pay for the stock. If a trader who owns the stock wants to sell some of it, they can expect to receive $20 per share for their sale. However, if there are no buyers at this price level, the seller may have to decrease the bid price until a buyer is found.
Traders can usually find the bid price on the left side of the quote display for an instrument. Next to the bid price is the ask price, which refers to the lowest price a seller is willing to sell an asset. The bid price is always lower than the ask price. The difference between the bid price and the ask price is known as the bid-ask spread. It is important to consider the spread when trading, and spreads for the same instruments can vary between brokers.
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