What is the difference of Bid and ask in Trading ?

Bid and ask are just the two sides of a price quote in any market (stocks, FX, crypto, etc.): --- ## 1. Basic definitions - **Bid price** 💰 - The **highest price buyers are currently willing to pay**. - If you **sell immediately (market order)**, you sell at the **bid**. - **Ask price (or Offer)** 🏷️ - The **lowest price sellers are currently willing to accept**. - If you **buy immediately (market order)**, you buy at the **ask**. --- ## 2. Bid–Ask Spread - **Spread = Ask – Bid** - This is: - A **cost to you** as a trader/investor. - **Income for market makers/liquidity providers**. - A measure of **liquidity**: - **Tight spread** (e.g., 100.00 bid / 100.01 ask) → very liquid, lots of trading. - **Wide spread** (e.g., 100.00 bid / 100.50 ask) → less liquid, more costly to trade. --- ## 3. Quick example Suppose a stock quote shows: - **Bid:** 50.00 - **Ask:** 50.05 Then: - If you **buy now with a market order**, you pay **50.05** (the ask). - If you **sell now with a market order**, you receive **50.00** (the bid). - The **spread** is **0.05** per share. --- ## 4. How your order type interacts with bid/ask - **Market Buy** → fills at current **ask** (or higher, if size is large). - **Market Sell** → fills at current **bid** (or lower, if size is large). - **Limit Buy at X** → becomes part of the **bid side** if X is at/above current best bid. - **Limit Sell at X** → becomes part of the **ask side** if X is at/below current best ask. --- If you’d like, I can walk through a real-time order book example and show exactly how your order would fill in different scenarios.