Bid and Ask

Bid: The bid price is the highest price that a buyer is willing to pay for a security or Asset. It represents the demand for the Asset.

Ask: The ask price, also known as the offer price, is the lowest price that a seller is willing to accept for a security or Asset. It represents the supply of the Asset.

In trading, the difference between the bid and ask prices is known as the spread. A narrower spread often indicates higher Liquidity in the market.

Example: If the bid price for a Stock is $50 and the ask price is $52, the spread is $2. A buyer can purchase the Stock at the ask price of $52, while a seller can sell it at the bid price of $50.

Case: In a volatile market, bid prices may drop quickly as buyers withdraw, while ask prices may remain high. This can widen the spread, making it more expensive for traders to enter or exit positions.