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What is the Bid / Ask? - The Wealth Academy presented by Valentine Ventures, LLC

588 ratings | 91379 views
What buyers are willing to pay and what sellers are willing to accept is the basis for stock trading (along with just about anything). In the stock markets, these values are known as the BID and the ASK, and we'll run you through what they mean here in The Wealth Academy. Bill Valentine, CFA is the President and Portfolio Manager at Valentine Ventures, LLC, a wealth management firm located in Bend, Oregon. A financial educator, Bill puts out weekly market updates via The Hog Blog. Visit http://valentineventures.com/blog to view more of our content and sign up for weekly email notification of our latest communiques.
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Text Comments (34)
BHAV BHUTI (3 months ago)
Bid meaning buyer Ask means seller ???
Kazuya Minegishi (11 days ago)
@Valentine Ventures man you are amazing. Keep up the good work 😁👍
Valentine Ventures (3 months ago)
Shailendra, correct. Sellers ask for their desired price and buyers bid what they are willing to pay.
Danita Brooks (4 months ago)
Very clear explanation. Thank you.
Valentine Ventures (4 months ago)
Thanks for watching, Danita!
Rabindra Sahu (4 months ago)
Bid amount meaning in a supply tender
integra (6 months ago)
In TD Broker when we enter "Market" for price , will that be the Ask price ?
Ruben Rojas (1 month ago)
Yes. When someone wants to buy fast... meaning if your see that stock is about to break out a major resistance line then some traders with good knowledge know that an inminente break out will occurs then they will also will try to buy fast some shares so the problem is... there are good numbers of traders anxious to buy right now so your only option if you want to buy fast ...buy using market order. And Market order is done on the ask side. Why? Because the ask side is for traders that are selling their shares and your idea is to buy really fast some shares. Only problem with buying the market order is that the price could change rapidly and rather than yoU buying right at the break out you buy .15 cents above the break out. If you are lucky the price will jump another .15 cents after your entry. Then you make some profits. A lot to traders prefer a limit order bc is you limit your entry price. But the problem also is that bc the price is moving to fast your limit order may be never get fill. This is how I see the market. The best way to trade then is anticipating the next move. One thing can help is you see higher low in a trend.
Albert John Nguyễn (6 months ago)
I feel the energy the dynamics.
ed0985587 (8 months ago)
So what DRIVES the bid and ask price? Does it have anything to do with order limits placed?
Bill Valentine (8 months ago)
Not really. It's a function of the changing demand for the underlying, combined with how market makers (who provide both the bid and ask) want to play it, but market orders on both sides will have some impact. It's kind of an incomplete answer, but the short version is competition + change in demand.
mykx99 (9 months ago)
Thanks for this video I got a question please: if there's 100 of us who are willing to buy/sell the stock at a specific price, how will mine be hit? Is there an order of priority? Also, what if sizes of two matched bid/ask price do not match, which one is to follow?
Valentine Ventures (8 months ago)
Hello. That's a great question. Theoretically, let's say you and 99 other investors are all looking to buy a stock at, let's say, $10.00, and you all enter that "bid" on the same day, and let's assume it's the highest (best) bid, then theoretically, it gets filled in the order in which they were received. But, let's say the order sizes are different--from 1 share to 10,000 shares, if there's a seller of 10,000 shares, they might get matched up with the buyer bidding for 10,000. If the seller places a market order, it should work such that it fills in the order received, eating up shares until the 10,000 are filled, which may leave the last buyer unfilled on his lot unless it works out perfectly that his shares rounded out the 10,000. The other issue is the technology of the broker (electronic or otherwise) that takes your order. Theoretically, you could end up behind another buyer who placed their order right after you, if their broker executed more quickly. As a general rule, if you want to buy something, and it trades frequently throughout the day, and the bid/ask spread is small, it's often easier if you place a "market" order (which will likely get executed at the "ask") if your interest is getting shares that day, versus holding out for a couple of pennies in discount. Sometimes I place a bid ("limit order"), and if it doesn't fill after waiting, I'll move it to a market order to just be done with it (again, assuming the spread isn't large. Hope that helps.
Kryptone Galaxy (1 year ago)
thanks for the simple clear explanation.
Valentine Ventures (1 year ago)
Happy to help!
Stefani Stephen (1 year ago)
Thank you, this was really helpful
Valentine Ventures (1 year ago)
Glad it helped! Let us know if you have any other questions.
Subasish Halder (1 year ago)
Bob Amarant (1 year ago)
Would be nice if you added market and limit orders to the discussion, you almost did. And.... Explain the bid ask, ratio.
Gaz Chao (2 years ago)
It sounds like your last sentence is not finished. Lol
Loyd Sevilla (2 years ago)
KingB00ZeR (2 years ago)
Thank you this video helps a lot however your bid/ask examples were very close together and what made me want to look this up was a stock I was looking at today which has a much bigger price gap. BID/ASK 25.26 / 43.00 (SNCR) Why is there so much difference between the ask and bid for this stock at this time?
Whatatay T (2 years ago)
15 second intro is way too long so. thumbs down.
TradingKid1998 (2 years ago)
quick question. nobody has ever been able to answer. why is there a spread at all? why cant 100.50 be the and bid at the same time to stop the confusion?
Sucio (9 months ago)
There is a spread because the market maker makes a commission on each trade's spread. Also the NYSE is an auction market, so traders are constantly bidding for shares of a stock. As opposed to the NASDAQ, which is a negotiated market, transactions are slower and traders make deals on shares.
Valentine Ventures (1 year ago)
Great question! The bid ask spread is the amount earned by the broker between the transaction.
Mark M (2 years ago)
This is an amazingly excellent question (I have wondered the same thing). I have come to believe it is somewhat of a sham, unless you are trading penny stocks where a few-penny difference can make a huge profit or loss (example: 1,000,000 shares at $0.015 to $0.017 can result in a $2,000 profit or loss
Gavin McGuinness (2 years ago)
I would imagine it is down to some of the driving forces. If the two reach parity then there is always going to be sellers who want more money and buyers who want a better deal. These two forces are driving a wedge between the two parties and increasing the spread. Just my thoughts on it though.
Keera Sara (2 years ago)
Thank u so much;)
陈露露 (3 years ago)
great! Thanks
Asif Rizwan (3 years ago)
great. thanks
Tony Rivera (3 years ago)
Thank you for unraveling this mystery of those two terms! Great job!
Alah-Eh Batangueno (4 years ago)
So, When you buy a stock do you choose the Ask Price?  What I know is when you go rid of your stock they gave you the bid price.  Is that correct?  Please advice.  Thank you.
Sucio (9 months ago)
When you buy a stock you BID a price $ for it. When you sell a stock you ASK a price $ for it.

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