A bid is an offer investors make to buy a security.
Think of it as the price set by the buyer, or the highest price a buyer is willing to pay for a security. The bid price in a market is the highest price offered for that security.
The bid is opposed by the ask, which is the price the seller wants for a security, or the lowest price the seller will accept for it. The difference between the bid price and the ask price is called the spread.
For example, an investor bids $25 per share on 100 shares of Company ABC’s stock. The transaction is completed if an ABC stock seller accepts the bid price.
If the seller had asked for $28 per share, negotiation would need to take place for the sale to happen.
Investors may bid a price below the ask and wait for the seller’s price to match, or not buy it at all if the price stays higher.