Bid vs Ask Price in Stocks: What the Spread Means for Investors

When viewing a stock quote, you may see a bid price, an ask price, and a last-traded price. These numbers can be different even though they refer to the same stock.

The main difference between bid vs ask prices in stocks is:

• The bid price is the highest price a buyer is currently willing to pay.
• The ask price is the lowest price a seller is currently willing to accept.
• The difference between them is called the bid-ask spread.

An investor submitting a market order to buy will generally trade at or near the available ask price. Someone submitting a market order to sell will generally trade at or near the available bid price.

The displayed prices do not guarantee that the entire order will execute at those exact levels. Quotes can change quickly, and the available number of shares at each price may be limited.

Understanding bid and ask prices can help investors recognize hidden trading costs, interpret stock quotes, and choose more suitable order types.

Bid vs Ask Price at a Glance

What Is the Bid Price in Stocks?

The bid price is the highest publicly displayed price at which a buyer is currently willing to purchase a security.

Suppose a stock quote shows a bid of $49.95. This means at least one market participant is offering to buy shares at $49.95.

If you submit a market order to sell, your broker will generally attempt to execute it against the best available bids.

You may not receive $49.95 for every share because:

• The bid can change before your order reaches the market.
• Only a limited number of shares may be available at that price.
• Another order may execute first.
• A large order may fill at several prices.
• Market volatility may cause quotes to move rapidly.
• Your quote may be delayed.
• Your order may be routed to a different trading venue.

The bid is therefore an indication of current buying interest—not a guaranteed sale price.

What Is the Ask Price in Stocks?

The ask price, also called the offer price, is the lowest publicly displayed price at which a seller is currently willing to sell a security.

Suppose the same stock has an ask price of $50.00. This means at least one market participant is offering shares for sale at $50.

A market order to buy will normally seek execution against the lowest available asks.

Again, the displayed price is not guaranteed. If only 100 shares are available at $50 and you submit an order for 500 shares, part of the order may execute at $50 while the remainder executes at higher available prices.

The SEC’s Investor.gov guidance explains that a market order generally executes at or near the current ask for a purchase and at or near the current bid for a sale. Execution is expected, but the price is not guaranteed. Review the SEC’s explanation of common stock-order types.

What Is the Bid-Ask Spread?

The bid-ask spread is the difference between the lowest ask price and highest bid price.

Consider a stock with:

• Bid price: $49.95
• Ask price: $50.00

The ask exceeds the bid by five cents, so the spread is five cents per share.

If someone buys 100 shares at the $50 ask and immediately sells them at the $49.95 bid, the difference would be approximately $5 before considering price movements, regulatory fees, taxes, commissions, or execution at other prices.

This is a simple illustration, not a promise that both trades would execute at the displayed quotes.

The spread acts as an indirect trading cost. A broker may advertise commission-free trades, but an investor can still incur costs by buying at the ask and selling at the bid.

Why Is the Ask Price Higher Than the Bid Price?

Buyers generally want to pay less, while sellers generally want to receive more.

The highest buyer and lowest seller have not yet agreed on a price. Their difference creates the spread.

A trade occurs when:

• A buyer accepts an available ask
• A seller accepts an available bid
• A new order improves the bid or ask
• Compatible orders meet at another price

If buyers become more aggressive, they may submit higher bids or accept existing asks. If sellers become more aggressive, they may lower their asks or accept existing bids.

The best bid and ask can therefore change constantly during active trading.

Do You Buy at the Bid or Ask Price?

A market order to buy normally executes against available ask prices.

For example, if a quote displays:

• Bid: $25.10
• Ask: $25.15

A market buyer will generally pay at or near $25.15, assuming sufficient shares remain available and market conditions do not change.

A buyer can instead enter a limit order below the ask. For example, the investor might set a $25.10 buy limit.

That order would execute only at $25.10 or lower. It may remain unfilled if sellers continue demanding higher prices.

A lower limit price controls the maximum purchase price but sacrifices certainty of execution.

Do You Sell at the Bid or Ask Price?

A market order to sell normally executes against the available bid.

Using the previous quote:

• Bid: $25.10
• Ask: $25.15

A market seller would generally receive at or near $25.10, subject to market movement and available bid size.

A seller can place a limit order at $25.15 or another chosen price. The order will execute only at the limit price or higher.

If no buyer accepts that price, the order may not execute.

Bid Price vs Ask Price vs Last Price

The last price is the price of the most recently completed trade.

It is historical information—even if the trade occurred only a fraction of a second ago.

The last price can be:

• Equal to the current bid
• Equal to the current ask
• Between them
• Above both current quotes
• Below both current quotes

In a fast-moving or thinly traded stock, the last price may not accurately represent the price available for a new market order.

A Simple Stock Quote Example

Suppose a stock quote displays:

Here is what the quote suggests:

• Buyers currently offer as much as $39.90.
• Sellers currently ask at least $40.
• About 200 shares are displayed at the best bid.
• About 100 shares are displayed at the best ask.
• The most recent completed trade occurred at $39.95.
• The difference between the current bid and ask is ten cents per share.

If an investor submits a market order to buy 300 shares, only 100 shares are displayed at the $40 ask. The remaining portion might execute at one or more higher prices.

If an investor submits a market sell order for 300 shares, approximately 200 shares are displayed at $39.90. The remainder might execute against lower bids.

Displayed size can change, and some available liquidity may not appear in a basic quote.

What Is Bid Size?

Bid size is the number of shares publicly displayed at the best bid price.

A quote may display:

• Bid: $30.25
• Bid size: 500 shares

This indicates displayed buying interest for 500 shares at $30.25.

It does not guarantee that:

• All 500 shares will still be available when your order arrives
• Your order has priority
• A 500-share market sell order will fill entirely at $30.25
• Additional shares are not available elsewhere
• Hidden or non-displayed orders do not exist

Bid and ask size provide useful context, but they are only snapshots of a changing market.

What Is Ask Size?

Ask size is the number of shares publicly offered at the best ask price.

If a quote shows an ask of $30.30 with an ask size of 100, sellers are publicly offering approximately 100 shares at $30.30.

A market buy order larger than the displayed ask size may consume that offer and continue to higher asks.

This can cause the average purchase price to exceed the price initially displayed.

What Causes a Wide Bid-Ask Spread?

Several factors can widen a stock’s bid-ask spread.

Low liquidity

A security with few buyers and sellers may have a wider difference between acceptable prices.

Low trading volume

Thinly traded stocks often have fewer competing orders, making their spreads wider.

Trading volume and liquidity are related but not identical. A stock may have recent trading volume without consistently deep quotes at the best prices.

High volatility

During rapid price movements, liquidity providers may widen their quotes to compensate for the risk of the market moving against them.

Market uncertainty

Earnings announcements, economic reports, mergers, regulatory developments, and unexpected news can increase uncertainty and widen spreads.

Small company size

Shares of small or less-followed companies may trade less frequently than large, widely held stocks.

Extended-hours trading

Pre-market and after-hours sessions generally have fewer participants and fragmented liquidity. Spreads may be considerably wider than during regular market hours.

Large order size

A large order may be greater than the number of shares available near the current quote. Executing it may require trading across several price levels.

Complex or specialized investment

Options, certain ETFs, exchange-traded notes, preferred stocks, and other specialized securities may have wider spreads because fewer people trade them.

Our ETN vs ETF comparison explains why liquidity and market-price deviations deserve particular attention when evaluating exchange-traded notes.

What Causes a Narrow Bid-Ask Spread?

A spread may narrow when:

• Many buyers and sellers participate
• Trading volume is high
• Multiple market makers compete
• Price volatility is low
• The underlying market is open
• Information is widely available
• Order-book depth is strong
• The security trades actively on major venues

Large-company stocks and broad-market ETFs often have relatively narrow spreads during regular trading hours. This is not guaranteed, especially during market disruptions.

Why the Bid-Ask Spread Matters

A small spread may appear unimportant, but it can affect investment returns.

The spread matters more when:

• Trading frequently
• Buying a large number of shares
• Trading low-priced stocks
• Buying illiquid securities
• Trading outside regular hours
• Using market orders
• Entering and exiting a position quickly
• Trading options or specialized products

Suppose one stock has a one-cent spread and another has a 50-cent spread. Buying and immediately selling the second stock would create much more trading friction, assuming the quotes remained unchanged.

Long-term investors trade less frequently, so an individual spread may have a smaller effect on their total results. They should still examine liquidity before placing an order.

Bid-Ask Spread as a Percentage

Comparing only the number of cents can be misleading because stocks trade at different prices.

A ten-cent spread on a $200 stock represents much less trading friction proportionally than a ten-cent spread on a $2 stock.

To compare two stocks in plain terms:

1. Note the difference between the ask and bid.
2. Compare that difference with the approximate middle of the two prices.
3. Express the result as a percentage.

For example, suppose a $10 stock has a bid of $9.90 and an ask of $10.10. The difference is 20 cents, which is approximately 2% of the stock’s midpoint price.

Now suppose a $100 stock has a bid of $99.90 and an ask of $100.10. Its spread is also 20 cents, but it represents only about 0.2% of the midpoint price.

The second stock has a much narrower proportional spread even though both spreads are 20 cents.

This WordPress-friendly comparison avoids complex formula formatting while showing why percentage context matters.

How Market Orders Interact With Bid and Ask Prices

A market order prioritizes execution over price control.

When buying:

• The order generally executes against the lowest available asks.
• A large order may move through several ask prices.

When selling:

• The order generally executes against the highest available bids.
• A large order may move through several bid prices.

According to the SEC, a market order generally executes immediately, but the execution price is not guaranteed. The last-traded price is not necessarily the price the investor receives.

Market orders may be more predictable for highly liquid securities during regular trading hours. They can be riskier when:

• Quotes are moving rapidly
• The spread is wide
• Trading volume is low
• The order is large
• Markets have just opened
• Important news has been released
• The order is entered outside regular hours

How Limit Orders Interact With Bid and Ask Prices

A limit order prioritizes price control over execution certainty.

A buy limit order specifies the maximum price the investor will pay. It can execute at the limit price or lower.

A sell limit order specifies the minimum price the investor will accept. It can execute at the limit price or higher.

For example, if a stock has:

• Bid: $74.90
• Ask: $75.10

An investor could enter a buy limit at $75. If sellers do not accept $75 or less, the order will not execute.

The limit order may:

• Fill completely
• Fill partially
• Remain open
• Expire
• Be canceled
• Never execute

WealthLedger’s detailed guide to market orders vs limit orders explains the trade-off between immediate execution and price protection.

Can You Place an Order Between the Bid and Ask?

Yes. An investor may place a limit order at a price between the current bid and ask.

Suppose a stock shows:

• Bid: $20
• Ask: $20.10

A buyer might place a limit order at $20.05.

That order improves the publicly displayed bid if it is eligible to be displayed and receives appropriate routing. It may execute if a seller accepts $20.05.

The buyer may obtain a better price than the original ask but gives up the certainty of immediate execution.

A seller can similarly place a sell limit between the bid and ask.

What Is Price Improvement?

Price improvement occurs when an order executes at a price better than the publicly displayed quote.

For example:

• A market buy order receives a price below the displayed ask.
• A market sell order receives a price above the displayed bid.

Price improvement is possible but not guaranteed.

The SEC states that brokers have a duty to seek the best execution reasonably available. Relevant factors can include:

• Execution price
• Speed
• Likelihood of execution
• Opportunity for price improvement
• Overall transaction terms

Read the SEC’s explanation of how brokers execute customer orders.

What Is Slippage?

Slippage is the difference between the price an investor expects and the actual execution price.

Suppose an investor sees an ask of $15 and enters a market order to buy. Before the order executes, the best available ask rises to $15.08.

If the trade fills at $15.08, the investor experiences eight cents of unfavorable slippage per share compared with the observed quote.

Slippage can result from:

• Fast markets
• Delayed quotes
• Large orders
• Low liquidity
• News events
• Orders placed outside regular hours
• Limited shares at the best quote

A limit order may control unfavorable execution price but introduces the possibility of no execution.

Bid and Ask Prices During Extended-Hours Trading

Extended-hours trading includes sessions before and after regular U.S. market hours.

Risks may include:

• Wider spreads
• Lower trading volume
• Fewer market participants
• Greater price volatility
• Limited quote information
• Different prices across trading venues
• Competition with professional traders
• Restrictions on available order types

Many brokers accept only limit orders during extended sessions.

Investor.gov warns that consolidated quote information available during regular trading hours may not be as readily available during extended hours. Review the SEC’s extended-hours trading risks.

An investor should not assume that a regular-session closing price will remain available after hours or at the next market opening.

Bid and Ask Prices for ETFs

ETFs also have bid and ask prices.

The ETF’s spread can be affected by:

• ETF trading volume
• Liquidity of underlying holdings
• Number of market makers
• Market volatility
• Whether underlying markets are open
• Creation and redemption activity
• Fund size
• Complexity of the portfolio

An ETF with modest trading volume can sometimes maintain a reasonable spread when its underlying securities are highly liquid and market makers can efficiently hedge the position.

Conversely, an ETF holding thinly traded bonds or foreign securities may have wider spreads even when the ETF itself appears active.

Bid and Ask Prices for Options

Options can have wider spreads than heavily traded stocks.

An option’s liquidity depends on the specific:

• Underlying security
• Strike price
• Expiration date
• Contract type
• Trading volume
• Open interest
• Market conditions

An actively traded stock may have a narrow spread while one of its distant-strike or long-dated options has a much wider spread.

Option investors should not use the stock’s liquidity as proof that every related option contract is liquid.

Bid and Ask Prices for Penny Stocks

Low-priced and thinly traded stocks can have very wide proportional spreads.

For example, a five-cent difference may appear small. But if the stock itself trades near 50 cents, that difference represents substantial trading friction.

Other risks may include:

• Limited public information
• Price manipulation
• Low volume
• High volatility
• Difficulty selling
• Delayed quotes
• Few market makers
• Large price changes from small trades

A low share price does not make a stock inexpensive based on business value, nor does it reduce investment risk.

How to Check the Bid-Ask Spread Before Trading

Before submitting an order:

1. Confirm whether the quote is real-time or delayed.
2. Check the bid and ask prices.
3. Review bid and ask sizes.
4. Compare the spread with the security’s approximate price.
5. Examine recent trading volume.
6. Determine whether the underlying market is open.
7. Check for current news or trading halts.
8. Consider the size of your order.
9. Select an appropriate order type.
10. Review the completed order before confirming.
11. Check the actual execution afterward.

If you are new to brokerage accounts, WealthLedger’s guide to margin accounts vs cash accounts explains how account type can change buying power, borrowing costs, and trading risk.

Common Bid and Ask Mistakes

Assuming the last price is the current purchase price

The last price shows a completed trade, not necessarily the current ask.

Assuming a market order guarantees the quoted price

A market order emphasizes execution. Prices can change before or during the fill.

Ignoring the spread on commission-free trades

A zero commission does not remove trading friction from the spread.

Trading a large order against limited quote size

A large order may execute across several price levels.

Using market orders in illiquid securities

Wide spreads and limited depth can produce unexpectedly poor executions.

Ignoring extended-hours risks

After-hours quotes may be less competitive and more volatile.

Canceling and immediately replacing an order

Confirm that the original order was actually canceled. Otherwise, both orders could execute.

Believing the ask represents fair value

The ask is only the lowest current selling offer. It is not an independent assessment of the company’s value.

Choosing an investment solely because its spread is narrow

Liquidity is important, but investors should also evaluate the company, fund, risks, costs, objectives, and portfolio role.

Frequently Asked Questions

What is the difference between bid and ask prices in stocks?

The bid is the highest current price a buyer offers. The ask is the lowest current price a seller will accept.

Is the bid or ask price higher?

The ask is normally higher than the bid. The difference is the bid-ask spread.

Do I buy a stock at the bid or ask price?

A market buy order generally executes at or near available ask prices. A buy limit order allows you to specify the maximum price you will pay.

Do I sell a stock at the bid or ask price?

A market sell order generally executes at or near available bid prices. A sell limit order allows you to specify the minimum acceptable price.

Why did my stock purchase execute above the last price?

The last price was only the most recent completed trade. The available asks may have increased before your order executed.

Why did my sale execute below the displayed bid?

The quote may have changed, available bid size may have been insufficient, the quote may have been delayed, or the order may have filled at multiple levels.

What does a wide bid-ask spread mean?

A wide spread commonly indicates lower liquidity, higher uncertainty, greater volatility, or limited competition among orders. It also creates greater trading friction.

Is a narrow bid-ask spread always better?

A narrow spread generally lowers trading friction, but it does not prove that the security is a good investment.

What is bid size and ask size?

Bid size is the displayed number of shares buyers seek at the best bid. Ask size is the displayed number of shares sellers offer at the best ask.

Can I buy at the bid price?

You can enter a buy limit order at the bid, but it will execute only if a seller accepts that price and your order receives an eligible position in the queue.

Can I sell at the ask price?

You can place a sell limit order at the ask, but it will execute only if a buyer accepts that price.

What is the last price?

The last price is the price of the most recently completed trade. It may differ from the current bid and ask.

Do bid and ask prices change after hours?

Yes. Extended-hours quotes can change significantly and often have lower liquidity and wider spreads.

Does the broker keep the entire spread?

Not necessarily. The spread reflects the difference between available buying and selling prices. Market makers, exchanges, wholesalers, brokers, and other participants can influence execution economics, but the complete spread is not automatically a brokerage fee.

Final Verdict

The bid and ask prices show the prices currently available on opposite sides of the stock market.

The bid represents the highest displayed buying offer. The ask represents the lowest displayed selling offer. The difference between them—the bid-ask spread—is a real source of trading friction even when a broker charges no commission.

Before trading, investors should:

• Check both the bid and ask
• Avoid treating the last price as a guaranteed quote
• Review the displayed size
• Consider the proportional width of the spread
• Use extra caution in illiquid or volatile securities
• Understand the difference between market and limit orders
• Review the actual execution price afterward

The spread is only one part of an investment decision. A security with a narrow spread can still lose value, while a wide spread does not automatically make an investment unsuitable. Evaluate liquidity alongside the investment’s fundamentals, risks, costs, and role within your portfolio.

This article provides general educational information and does not constitute personalized investment, tax, legal, or financial advice. Market quotes can change rapidly, and all investments involve risk.