The bid is the highest price that buyers are currently offering for an asset. It is the top of the buy side of the order book. If you want to sell immediately, the bid is the price you sell into.
How it works
Buyers compete by bidding higher, so the bid constantly updates to the most aggressive standing buy order. When buying interest strengthens, the bid rises; when buyers pull back, it drops or thins out.
A sell order that executes immediately matches against the bid first. If the bid's quantity is exhausted, the remainder fills at lower bid levels — which is how larger sell orders end up with a worse average price.
Why it matters
Open positions are commonly valued at the bid, because that is roughly what selling now would bring. This is why a fresh long position can show a small paper loss before the market moves at all.
The bid is one half of a quote pair. On its own it says nothing about where you could buy — the ask answers that question.
A simple market example
A stock shows Bid 99.90 / Ask 100.10. An investor holding 100 shares who sells immediately receives about 9,990, not 10,010 and not the last traded price of 100.05 — the bid is the standing offer that actually takes the other side.
Common mistakes
Buying at what you think is “the price on screen” without checking whether it is the bid or the ask. Immediate buys fill at the ask.
Treating the bid as guaranteed for large orders. The displayed bid is only the best tier; size beyond it fills lower.
Frequently asked questions
Why is the bid always lower than the ask?
Because they are the best terms of two sides that have not met: the most a buyer will pay sits below the least a seller will accept. The gap is the spread.
Does the bid include every buyer?
No. It is the single highest standing bid. Lower bids queue behind it and only matter if the best tier is consumed.
Is the bid the same as the closing price?
No. The last or closing price is a record of completed trades; the bid is a live offer for the next immediate sale.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.