Bid vs Ask vs Market Price

Imagine you want to buy a used bicycle online.

One person says:

“I’ll sell it for $100.”

Another person says:

“I’m only willing to pay $90.”

There is a gap between:

• what buyers want to pay
• and what sellers want to receive

The stock market works the same way.

The bid price is:

The highest price a buyer is willing to pay for a stock.

The ask price is:

The lowest price a seller is willing to accept for a stock.

For example:

Imagine:

• buyers are offering $99
• sellers want $100

Then:

• the bid is $99
• the ask is $100

The difference between them is called:

The spread

Now imagine someone agrees to buy at $100.

That completed trade becomes:

The market price

The market price is simply:

• the most recent price where a buyer and seller agreed to make a trade

These prices constantly change because:

• buyers change their offers
• sellers change their prices
• the market moves every second

Popular stocks often have:

• very small spreads
• lots of buyers and sellers
• high liquidity

Less popular investments may have:

• larger spreads
• fewer buyers
• more price movement

This is why stock prices on investing apps can appear to move constantly throughout the day.

In simple terms:

The bid is what buyers want to pay, the ask is what sellers want to receive, and the market price is where a trade actually happens.