1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

The Bid, Ask, and Last

By

Day trading markets (stocks, futures, etc.) have three separate prices that update in real time whenever the markets are open. These prices are known as the bid, the ask, and the last price, and together, these prices provide a complete picture of the current state of the market in question.

Bid Price

The bid price represents the highest priced buy order that is currently available for the market (i.e. the highest price that a trader is willing to pay to go long). The bid price is the same as the highest priced limit order on the buying side of the order book (the level 2 market data).

The bid price is the price that is received whenever a trader places a market sell order (i.e. a market order to go short). The reason for this is that a market sell order is always filled at the best available price, and for a sell order, the best available price is the highest buy order.

Ask Price

The ask price represents the lowest priced sell order that is currently available for the market (i.e. the lowest price that a trader is willing to pay to go short). The ask price is the same as the lowest priced limit order on the selling side of the order book (the level 2 market data).

The ask price is the price that is received whenever a trader places a market buy order (i.e. a market order to go long). The reason for this is that a market buy order is always filled at the best available price, and for a buy order, the best available price is the lowest sell order.

Last Price

The last price represents the most recently traded price (i.e. the price at which the last trade occurred). The last price will move back and forth between the bid and ask prices as selling and buying orders are filled. For example, if a trader places a market buy order, the last price will move to the ask price, as the market buy order is filled. Conversely, if a trader places a market sell order, the last price will move to the bid price.

The Market Price

When they are talking about market prices, both traders and non traders usually just refer to the market price, as if there was only a single price quote for the market. What they are actually referring to is the last price, as this is the price where the most recent transaction occurred.

The last price is also the price that most charts are based upon (i.e. the chart will update with each change of the last price), however, it is possible to base a chart on either the bid or the ask price instead.

  1. About.com
  2. Money
  3. Day Trading
  4. Day Trading Basics
  5. Day Trading Market Prices: Bid, Ask, Last

©2014 About.com. All rights reserved.