What are Bid and Ask Prices?

Price quotes for tradable securities consist of two prices, a bid price and an ask price (sometimes referred to as the offer price). A bid price is the price a broker is willing to pay for a security. The trader (customer) therefore sells securities at the bid price. The opposite of the bid is the ask price, which is the price at which a broker is willing to sell shares. This is the price that traders (customers) buy the securities from the broker. The bid/ask prices are always quoted together, and the bid price is always the lower of the two.

The use of bid and ask prices is a fundamental part of the market system, as it details the exact amount that you could buy or sell at any point in time. The current market price is not the price for which you can purchase or sell a security, but the price at which shares last traded.