Lesson 2 of 6 · 8 min
How prices move: bid, ask and spread
Every price is a meeting point between buyers and sellers.
At any moment, buyers post the highest price they will pay (the bid) and sellers post the lowest price they will accept (the ask). The gap between them is the spread.
When more buyers want shares than sellers are offering, buyers raise their bids and the price rises. When sellers outnumber buyers, they lower their asks and the price falls.
Large, frequently traded companies usually have spreads of a penny. Small, thinly traded stocks can have wide spreads — a hidden cost every time you trade.
Diagram
Trade example · AAPL (Apple)
Reading a quote before buying
An investor checks the live quote before placing an order.
- Bid
- $189.98 (buyers)
- Ask
- $190.00 (sellers)
- Spread
- $0.02
- Market buy of 5 shares fills at
- $190.00 → $950.00
Buying immediately means paying the ask. Selling immediately means receiving the bid.
On a thinly traded stock with a $0.50 spread, the same round trip would cost far more.
Prices are rounded examples for teaching, not live quotes or recommendations to buy or sell.
Key takeaways
- Bid = what buyers pay; ask = what sellers accept.
- The spread is a real trading cost.
- Supply and demand move the price.
Knowledge check
If you place a market order to buy, which price do you typically pay?
DisclaimerMoor Capital provides financial education and informational tools. Content is not individualized investment, legal, tax, credit-repair, or financial advice. Investing involves risk, including possible loss of principal.