What are the bid and ask prices?
In one line: The bid is the highest price a buyer will pay right now; the ask is the lowest price a seller will accept. You buy at the ask and sell at the bid.
A simple example
A stock's quote reads Bid $40.10 · Ask $40.13.
- Want to buy now? You pay the ask, $40.13.
- Want to sell now? You get the bid, $40.10.
The 3-cent gap between them is the Spread. Think of a shop that buys used phones for $200 and sells them for $230. You always buy at the higher price and sell at the lower one.
Why it matters
Knowing which price you get stops a lot of surprises. If you buy at $40.13 and look at a chart showing $40.10, you seem to be down already. You are, by the spread. That's normal.
It matters most for your exits. When you're in a buy, your Stop loss and target close the trade by selling, so they fill at the bid. When you're in a sell, your exits buy back, so they fill at the ask. Most charts plot the bid, so sell trades can hit a stop the chart never seemed to touch.
Market and limit orders
A Market order takes whatever bid or ask is there right now. A Limit order waits for your price. If you place a limit buy at $40.10, you're joining the buyers on the bid and waiting for a seller to come to you. You might pay less, or you might not get filled.
A common mistake
Placing orders right at the visible price on the chart. A buy limit set exactly at a level the chart shows may never fill, because the ask must drop to it. And a sell's stop set exactly at a level can get hit by the ask while the bid line on your chart stays clear. Leave a small buffer.
Many platforms let you show both the bid and ask lines on the chart. Turn them on while you learn.
Questions
Why is the ask always higher than the bid?
If a buyer and seller agreed on one price, the trade would happen at once. The prices still waiting are the ones that don't match yet, so the ask sits above the bid.
What does "last price" mean?
The price of the most recent trade. It can be at the bid, the ask, or between them.
Do bid and ask exist in crypto and futures too?
Yes. Every market with buyers and sellers has them. Busy markets usually have a tighter gap. See how to read stock charts for what the chart itself shows.
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