In stock trading, the ask is what the price and amount of shares an investor selling a stock or other security type is willing to accept in a transaction. The ask price and ask size is matched up with a buyer’s bid price and bid size in order for a transaction to occur.
Ask Price and Ask Size
The ask price is the price at which the stock is selling. Throughout the day the ask price will fluctuate second by second depending on the trading action, a short term investor needs to pay close attention to these prices if they are working with a short term investment strategy.
The ask size, in stock market language, means the quantity of orders for that particular stock. So if the ask size is larger than the bid size, then that means there is lower demand for the stock.
Bid-Ask Spread
The margin between the bid price and the ask price is known as the bid-ask spread. Stocks that are widely traded, or more liquid, will usually have a lower bid-ask spread. A bigger spread between the bid and ask prices means that a stock is less liquid and buyers and sellers may find it more difficult to find a counterparty for their trades unless they are willing to adjust their orders. For investors using market orders instead of limit orders, a trade could end up costing more because in order to fill the bid size, the investor will have to raise their bid price.
