Ask Colin

What are Bid and Ask and what is Bid/Ask Size?

Bid refers to the price that buyers are bidding for stock. Thus, if you are a buyer and you want to buy at $25, you would enter a bid in the market at $25. If I am also looking for the same stock, but only prepared to pay $24, I would put in a bid at $24. Obviously, your order will get done before mine if there is a seller willing to do business at these prices, because your bid is higher.

Ask refers to the price that sellers are asking for their stock. Thus, if you are a seller at $24, you would enter an offer in the market at $24 - or ask for $24 -for your stock. If I am also a seller, but I want $25 for my stock, I would put in an offer at $25 - or ask for $25 - for my stock. Obviously, your order will get done before mine if there is a buyer willing to pay these prices, because your asking price is lower.

At any one time there will be a range of prices at which buyers have entered bids to buy stock and sellers have put in offers - or are asking - to sell their stock. Each one will have nominated a quantity they want to buy (except in some markets, like ours, some large buyers and sellers may put in orders without disclosing how much they want to buy or sell).

Thus, if you ask $24 for 100 shares, then your ask size is 100 shares. However, you may not be alone. There may be another 10 sellers at your price with total orders for 2600 shares. In that case, the ask size is 2700 shares. In other words, at the ask there is 2700 shares offered for sale. The same idea applies to the bid.

Keyword: