Trading 101
Bid vs Ask Price: What Is the Bid-Ask Spread?
What the bid and ask prices mean, why there is a gap between them, and how the spread quietly affects what you pay when you trade.
Beginner investing lessons and fake-money practice from the maker of Quoliv.
Quick answer
The bid is the highest price a buyer is currently willing to pay for a stock. The ask is the lowest price a seller is currently willing to accept. The gap between them is called the bid-ask spread. When you buy at market you usually pay the ask, and when you sell at market you usually receive the bid.
What you’ll learn
- The bid is what buyers offer; the ask is what sellers want.
- The ask is almost always a little higher than the bid.
- The difference between the two is the spread.
- A market order usually buys at the ask and sells at the bid.
- Widely traded stocks tend to have narrow spreads; thinly traded ones can have wide spreads.
This explanation is part of our Day Trading lessons path, where you can explore the idea in short lessons and quizzes.
Two prices, not one
A stock quote often shows one headline number, usually the price of the last trade. Behind that number there are always two live prices: the best price someone is offering to buy at, and the best price someone is offering to sell at.
The bid is the highest price a buyer will pay right now. The ask, sometimes called the offer, is the lowest price a seller will accept right now. A trade happens when a buyer and a seller meet somewhere along that gap.
A simple example
Imagine a stock quoted with a bid of $50.00 and an ask of $50.05. The spread is $0.05. If you place a market order to buy 10 shares, you will likely pay about $50.05 each, or $500.50 before fees.
If you then sold those same 10 shares straight away with a market order, you would likely receive about $50.00 each, or $500.00. Nothing about the company changed, yet you are down $0.50. That small loss is the cost of crossing the spread twice.
Every round trip of buying and selling costs you roughly the spread, even before any commission or fee.
Bid vs ask at a glance
| Bid | Ask | |
|---|---|---|
| Who sets it | Buyers | Sellers |
| What it means | Highest price a buyer will pay | Lowest price a seller will accept |
| Usually | The lower of the two | The higher of the two |
| You get it when | You sell with a market order | You buy with a market order |
Why some spreads are wider
- Trading volume: stocks that trade millions of shares a day usually have spreads of a cent or two.
- Small or obscure companies: fewer buyers and sellers can leave a much bigger gap.
- Fast markets: during big news or sharp swings, spreads can widen quickly.
- Market open and close: spreads are often wider in the first and last minutes of the trading day.
How limit orders relate to the spread
A market order accepts whatever the best available price is, which usually means crossing the spread. A limit order lets you name the most you will pay or the least you will accept. If you set a buy limit below the current ask, your order may wait, fill later, or never fill at all.
Neither choice is automatically better. A market order prioritizes getting the trade done; a limit order prioritizes price. Knowing the bid and ask helps you understand what each one is likely to do.
Quoliv's simulator lets you place market and limit orders at real prices with $10,000 in fake money, so you can see how order choice affects your fills without risking anything.
Sources and methodology
This guide was written for education using the primary sources below. It does not evaluate your finances or recommend an investment. Read our editorial policy.