Difference between Bid Price and Ask/Offer Price
One can see ever-changing ‘Bid’ and ‘Ask/Offer’ columns in details of any stock or derivative on their broker’s app or website. In this post, we will see what exactly these ‘Bid’ and ‘Ask/Offer’ prices are.
Bid Price: Price presented by the Buyer of any stock or a derivative (options, futures) is called its Bid Price. This is the highest price that buyer is willing to pay. While placing a ‘Limit’ Buy Order, the buyer has to enter a price. This price acts as the bid price from that buyer.
If the current Market Price of a stock is Rs. 105 and the buyer has entered Limit Buy Price as Rs. 100, this price will go in Bid List in Market Depth of that stock maintained in High-to-Low manner and the buy order will get placed only when the market price falls to Rs. 100.
Ask/Offer Price: Price quoted by the Seller of any stock or a derivative (options, futures) is called its Ask/Offer Price. This is the lowest price that seller is willing to take. While placing a ‘Limit’ Sell Order, the seller has to enter a price. This price acts as the ask price from that seller.
If the current Market Price of a stock is Rs. 110 and the seller has entered Limit Sell Price as Rs. 110, this price will go in Ask/Offer List in Market Depth of that stock maintained in Low-to-High manner and the sell order will get placed only when the market price rises to Rs. 110.