When it comes to buying or selling stock, understanding the meaning behind Bid Price, Ask Price, and Last Sale Price will give you a much clearer picture of the price at which a stock is actually trading. Before we dive in, it’s important to remember that the stock market is actually an exchange, which means that every time you buy a stock, it’s being sold by someone else, and every time you sell a stock, it’s being purchased by someone else.
Last Sale Price
This is typically shown as a stock’s price, and is exactly what it sounds like: the price for which a stock last sold. It’s important to know that this is actually historical data (as in: it happened in the past!), and might not be what you would pay if and/or when you purchase the stock, or what you’d get if you sold it.
The Ask Price, on the other hand, is the price that a stock is actually being offered for. More technically, it’s the lowest price that sellers of the stock are willing to accept for it.
The Bid Price is the other side of the coin. This is the price that buyers are actually willing to pay for a stock, regardless of what sellers are asking for it. This works exactly like a bid at an auction – the highest bid wins.
The price displayed is the most recent sale price.
When you’re buying a stock, you’ll pay the Ask Price.
When you’re selling a stock, you’ll receive the Bid Price.
Wait! This is important!
It’s always important to pay attention to the blue price on the order screen when you want to buy or sell, because the world spins on even if the market is closed. This means that sometimes the Last Sale Price can be drastically different from what the stock will be traded for when the market re-opens.
You can always see Ask & Bid Prices by tapping “Buy” or “Sell” on a stock’s page, then tapping the blue price displayed on the order screen. Happy investing!