:: definitions

Traders101.com reproduces this definition here under license for your convenience.

The Bid is the price at which your broker will buy your position from you, the Ask is the price at which he will sell you a position. The distance between the bid and the ask (the spread) depends on several factors, such as how liquid the security is, how volatile the market is, the ratio between buyers & sellers and so on. This is why prices have two numbers - for example the price of CSCO might be quoted as 48 - 49. This means that if you want to BUY a share of CSCO, it will cost you 49 dollars, but if you want to SELL a share, you will only get 48 dollars for it. In the daily papers, usually only 1 price is shown, and this is the MID price (the average between the bid and ask). Think of it as you would foreign currency - when you go into a Bureau, they will give you £55 for your $100, but if you want to sell them that £55 back, you will only get $95. Spread betting companies have wider spreads between bid and ask than traditional brokers, allowing them to make up for the lack of commission charges.Note - the "Best Bid" for a stock is the higest price that any buyer is willing to pay for that stock at that particular point in time. The "Best Ask" is the lowest price that any seller is willing to accept for a stock. A Bid is made up of an actual Buy Limit Order that has been placed into the market. An Ask is made up of an open Sell Limit Order in the market.