DEFINITION of Bid price
The bid price is the amount a party is willing to pay in order to buy a financial instrument.
Also, it is the price which bidder offers for a specific good, job, or service. And it is valid only for the specified period.
WHAT IT IS IN ESSENCE
It is the opposite of an ask, which is the price that a seller will take in order to part with a financial instrument. In trading and investing, the bid is the amount a party is willing to pay in order to buy a financial instrument.
For any transaction to the occur on the market must be a buyer and seller. If you want to sell, in order for some asset to switch hands someone must buy it. Otherwise, nothing happens. This thing occurs in the stock market. Every day, on a large and frequent scale.
The bid price shows the highest price someone is willing to buy a stock at, at this moment. The bid is constantly changing. Since traders and investors push for position and react to new price information.
If you wish to buy or sell a stock, the current bid price is an assessment of what someone is willing to pay right now. Just like the highest bid at an art auction. It lets the seller know what someone is willing to pay for some good.
Bids usually comprise two elements: the price which the buyer is willing to pay, and the quantity of the financial assets they are looking to purchase.
HOW TO USE
A trade is executed when a matching bid and ask are combined. For instance, a trader bidding $200 per share for 100 shares in Apple will see their trade executed when a seller agrees to that price and level.