Bid & Ask Prices

Level 1 introduced the bid-ask spread through market makers. On an actual quote screen, you'll see this directly as two separate prices sitting side by side: the bid price and the ask price.

The bid is the highest price any buyer is currently willing to pay for the stock. The ask (sometimes called the offer) is the lowest price any seller is currently willing to accept. If you want to buy immediately, you generally pay the ask; if you want to sell immediately, you generally receive the bid.

Bid: $187.40   Ask: $187.44
Spread: $0.04

The highest price a buyer is currently willing to pay for a stock is called the ____.

The gap between the bid and the ask is the spread, and it tends to shrink for heavily-traded, liquid stocks and widen for thinly-traded ones. A tighter spread generally means it's cheaper to get in and out of a position quickly.

If you place an order to buy a stock immediately, which price do you generally pay?

The ask price is generally the price you receive when selling a stock immediately.