what does it mean when they say 400 bid / 100 ask ? not dollars but quantity of buyers and sellers . does that mean there are willing sellers than willing buyers ?
2007-02-08 11:27:29 · 3 answers · asked by Anonymous in Business & Finance ➔ Investing
I would like to clarify these little words 'bid' and 'ask' alone.
Their meaning is with respect to the specialist (on the NYSE, or market maker on NASDAQ) He is the one who is telling us: I am asking $42.66 (and/or bidding $42.64) for a share of HPQ
Suppose I (the seller) have a 100 shares of HPQ that I want to sell to you (the buyer). We never do this directly, we go to the exchange to 'see' the specialist, not to mention the brokers we need as well.
Now I sell my 100 share to the specialist at his BID price of $42.64 (he is my 'first' buyer) who in tern ASK you $42.66 for the same shares you are buying from him. We have no control over these two prices if we want our transaction completed at this very moment. He is conducting the market and only he can set the bid and ask prices and the words themselves have their proper meaning with respect to him as a buyer or seller.
As you see he charged us 2 pennies per share for the service.
That's why stock market is NOT a zero sum game.
The amount of money lost equals money won plus commissions AND bid-ask spread.
2007-02-08 22:04:50 · answer #1 · answered by Leo P 2 · 0⤊ 0⤋
The quantity and price must be taken together as one number. For example 400 at 26.23 bid 100 at 26.27 ask for example. What that means is the best current bid is for 400 shares at 26.23 (someone is willing to buy 400 shares at 26.23) and the best current ask is for 100 shares at 26.27 (someone is willing to sell 100 shares at 26.27). That is not all of the bids and asks that are on the books. That is just the best. For most active stocks, the market moves so fast that those numbers are just an indication really. They flash by in the blink of an eye. On the pink sheets, they might have a little more meaning.
2007-02-08 12:10:46 · answer #2 · answered by Anonymous · 2⤊ 0⤋
bid are the buyers
ask are the sellers
the bid price is what they buyers are "bidding" for a security
the ask price is what the sellers are "asking" for the security
2007-02-08 12:16:21 · answer #3 · answered by gcl915 2 · 0⤊ 1⤋