Bid price and Ask price in the share market?

hello friends, in this blog post(Bid price and Ask price in the share market) I am going to explain to you about the bid price and ask price in the share market. I will let you know what does these bid price and ask prices mean in the stock market?

These are the most common words whose meaning is almost known to everyone in general. But is this the same in the context of the share market? We will see this in this blog post(Bid price and Ask price in the share market).

Bid price and Ask price in the share market:

What is Bid and bid price?

When someone places the order to buy any share that is called bid or bidding. And the price at which the order was placed is called bid price.

There could be several bid prices for a single stock on a particular trading day as stock prices fluctuate very fastly. And there could be several bids on one price as several investors can invest money or buy shares at the same price.

As bidding means people are investing money on a particular share, so the share price or stock price will go up. This is also a good time to sell your stock if you have any holding or you can also buy some new for your long-term investment.

What is the asking price or sell price in the stock market?

when someone sells their stock then it is called selling and the price at which they want to place their sell order is called ask price.

There could be lots of ask prices by different clients who wish to sell their stocks. And there could be various sellers who are selling at the same price.

If there are various sellers then you can easily buy the stock for your long-term investment.

What is the impact of bid price and ask price in the stock market?

It has a major impact on stock volatility. If any stock has lots of buyers and sellers then it is the most volatile share and people are always interested to invest in this kind of stock or share.

And if there is an only one-sided activity in any stock means either clients are selling or buying then these types of stocks are very risky for the investors as the value of shares fluctuate very speedily. And these types of stocks suffer various circuit breaks like lower circuits or upper circuits.

So if you find both bid and ask prices in any stock then these types of stocks may be safe for buying or selling.

But if you are planning to take stock for a long time then these values may not impact much instead you should look for the company’s strength, full analysis of company management and their past and future investing profile, and business and revenue profile.

Quick Q&A:

What is the difference between bid/ask and price?

Bid price is the highest price a buyer is ready to pay and a asking price is the lowest price a seller ready to accept.

Can I buy the stock at the bid price?

yes, you can buy a stock at the bid price as the bid price is almost the same or very near to the asking price. Because when the seller initiates the selling at any particular price then only the buyer also places their order accordingly. so you can see both the box bid price and ask price. And can choose your final price of bidding according to the availability of the stocks.

Is the asking price always higher than the bid price?

Yes, in a standard flow this shall be always high to make a profit from the shares. But in the context of future and option, this order can be reversed to make profit sometime but that trading is based upon the prediction on falling and rising the stocks price for a short or long period of time.

What happens if a stock price goes to zero?

When a stock price turns to zero then it means investor loses all of their money and got -100%. And if anyone has a short position or has fone short sale of such stock they do not need to buy back stocks instead they will return it to the broker and will get 100% profit.

But SEBI already takes care of such a situation and never allowed to happen it as they apply the lower and upper circuit in every stock before the starting of each trading day and it is updated each day on the basis of stock position.

So when any share comes down very speedily and touches the lower circuit then the market is stopped for some time. And this protects the investors and brokers from a huge loss.

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Conclusion:

So friends, in this blog post(Bid price and Ask price in the share market) we have gone through the bid price and ask price in the share market and learned their impact of the stock buying and selling on one day and long-term investment. bid price is the buyer’s price and asks price is the selling price. A stock is considered the most volatile stock if it has both bid price and asks price in a bulk proportion.

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Anurag

I am a blogger by passion, a software engineer by profession, a singer by consideration and rest of things that I do is for my destination.