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My understanding is that for each tradable asset, there are two prices: Bids and asks; and trades will only happen when asks and bids exist at the same price po
by jachee 6y ago
My understanding is that for each tradable asset, there are two prices: Bids and asks; and trades will only happen when asks and bids exist at the same price point.
Most prices we see on tickers are the lowest asks, I believe.
- palebluedot 6y agoMost commonly, price you see on ticker quotes is the price the stock last traded at; i.e., the last price at which a buyer and seller exchange money for equity.
- jachee 6y agoOh, right. That makes sense. Hence it's that magical point where an ask equals a bid, and thus: trade! So doesn't that essentially mean that at the point of measurement—that is, a trade occurring—the price is both lowest ask and highest bid?
- ycombobreaker 6y agoYes, a trade represents an instant in time when a potential buyer and a potential seller agree on a price. The highest bid matches the lowest ask, and then the exchange "matching engine" generates a trade from them. Instantaneously afterward, the highest remaining bid will be below the lowest ask. When anyone talks about "the price" of a stock it is an approximation of some sort. Probably they mean the last traded price; maybe the midpoint (bid+ask)/2; maybe the symbol is in the middle of an auction and they mean the auction clearing price.
- tomc1985 6y agoThere's an order book listing buy and sell orders at a variety of prices clustered around big/ask, but the actual bid/ask numbers shown are a standardized summary view of the order book