HomeОбразованиеRelated VideosMore From: Sasha Evdakov: Tradersfly

Basics of the Bid, the Ask, and the Bid-Ask Spread in Stock Trading

789 ratings | 153153 views
If you want to purchase shares right away, you are going to have to pay the asking price. Similarly, if you want to sell shares right away, you have to pay the bidding price. Bid: -What people are looking to get the order at -If you want to purchase 100 shares of Nike, you might bid $50.90, but the ask is $50.98 -In order to get that order, you need to pay $50.98 Ask -What people are looking to get for the stock Bid-Ask Spread -It is the difference between the bid and the ask -What the market makers have to make -i.e. $50.98-$50.90 = $0.08 -$0.08 is what the market makers get paid to execute that order -As soon as you purchase the stock you lose $0.08 per share -You can't buy and sell immediately because it will be costly -You need to take the bid-ask spread into account when trading ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://criticalcharts.com -- http://investinghelpdesk.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/criticalcharts/ -- http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome
Html code for embedding videos on your blog
Text Comments (77)
Mark Olson (2 months ago)
Easiest to understand bid/ask explanation I've seen so far. Other videos I've watched present it from the point of view of the broker. I needed to hear it from my point of view as a buyer or seller. Thanks
You are more than welcome! Thank you so much for watching
Rudi Müller (2 months ago)
very well explained!
Thank you for the awesome comment.
ahsanullah shanto (3 months ago)
The way through which a broker makes profit is called spread. It lies in between ask and bid price. Traders want to have lowest trading spread because it increases trader’s profit. But we hardly find a low spread providing broker. Trade12 charges low trading spread to their traders and even it is seen in commodities.
quick Pro (5 months ago)
*here bids are in 10 million plus and ask is 2.6m only , still the price slips , how to avoid this trap *?
CRYPTONIGHT (6 months ago)
What if i short?
then you are a seller... Not a buyer
Arihant Aj (6 months ago)
Great explaination sir.. 🙏
Thank you so much for watching I'm glad that you found it helpful
AMG (8 months ago)
This guy is great! Soothing and informative teaching skills.
Master Armedforces (9 months ago)
How come sometimes the spread is small and sometimes it is huge.
MarvelGirl100 (10 months ago)
Tiny Trader88 (11 months ago)
Perfect! I didn't know what the difference meant. I was setting orders to the spread thinking this was good. I gave the market makers some money this week on paper, so I don't want to do it when I finally get to go live. Thank you Sasha!
Mohamed Lakhi (1 year ago)
You speak very well. Thanks
Music Junkie (1 year ago)
But what makes the price move?
Maeros - (8 months ago)
More demand than supply = higher price! More supply than demand = lower price! Using the same example from Sasha, if there is a car that 100 people want (demand = 100), but there is only one (supply =1), the price of the car will go higher. If there are 100 cars ready for sale (supply = 100), but only 1 person wants it (demand = 1), the price of that car will be cheaper, so the manufacture can get rid of something that is not making any money and is occupying a lot of space!
Music Junkie (1 year ago)
I mean. say there are more buyers than sellers in total but there are more sellers closer to the current price. why does the market price go down if there are more buyers(demand)?
SCHRODINGER’S CAT (1 year ago)
i'm on a budget. I got $5 to invest... now make me a billionaire
amar habib (1 year ago)
Hey Sasha, great video. I have a question about bid or ask size. If I have a look at yahoo finance for instance and im looking at appl. It shows Bid as 169.93 x 800 and Ask as 170.05 x 100. I understand the bid and ask but the bid/ask size is what im confused with. Does this mean that there are 100*100 = 10,000 shares available to purchase at the Ask price of 170.05?
really nice! I subscribed.
Ashu .. (1 year ago)
Thank you ☺
Henry Sun (1 year ago)
Bid/Ask is very confusing term because I don't know who is doing the bid and who is doing the ask. thanks for this video; clear and good.
Erlind Latifi (1 year ago)
i wish ur my teacher ...the whole thing became clear and simple now
Himanshu Dass (1 year ago)
what is the minimum amount of shares i can buy ?
XmisterIS (1 year ago)
Thank you!! I have read multiple websites on this, and they all read like gobbledigook. This is the first clear, simple, straightforward explantion I've found. Subscribed!
zTIEGAz (1 year ago)
A stock that i've been looking to trade has a bid of 5.70 and a ask of 8.70 and is on the market for $143 per share. With that being said, is it safe to say if the stock increases from $143 per share toe $183 per share would the bid and ask move respectably?
J. Blanco (2 years ago)
Thank you ! I've been to so many sites and couldnt get a simple answer. I just subscribed !
Nataly Yousef (2 years ago)
thank you , that was so easy to understand !
queenzfinezt82 (2 years ago)
If i buy a stock at 20 cents a share and the next day its trading at 40 cents a share but, the current "Bid" is at 25 cents a share, am i going to get 40 cents a share or the "Bid" price of 25 cents a share when i sell it? Sorry if i'm not making sense since i am just starting to grasp the concept of buying and selling stocks.
J C (2 years ago)
If the bid were 25 as you say, you would get the bid--if say, you did a market order to sell it, you would get the current bid. You always get what someone/the market is bidding; you always get a bid. But you don't have to take that bid, you in can wait for a higher bid, or offer a higher ask. Just as when buying you can low ball, and be ignored, as a seller you can ignore. If youre being ignored as a buyer, you raise your bid--if it's worth it to you. If you're ignored as a seller, you lower your ask. It's haggling just like in a street market somewhere. The current price is just the last completed deal--what some seller in the market got for that "fruit"and what some buyer paid. Seeing that, and it's movement, everyone trying to do a deal haggles accordingly. If you don't want to haggle or wait you just do a market order and get it/sell it at whatever bid/ask is coming in at the moment your order goes through--it's the "buy it now" option. That's it.
Steeve Thibodeau (2 years ago)
Yesterday, EPE bid price was like 2,50$ and the ask at 6,80$....wtf
TradingKid1998 (2 years ago)
quick question. nobody has ever been able to answer. why is there a spread at all? why cant NKE be 50.90 ask and 50.98 bid at the same time to stop the confusion?
Murray Flewelling (11 months ago)
You mean "no sense" and you know dam well what he means. TradingKid commodities is the major backbone of all countries economies and by that term I mean anything from bread to cars. There is no way that all people are going to agree on values so to in order to have a market place we need to establish a range of what something should cost. We all know a regular car should not cost 6 figures or four figures and therefore it comes down to what the market will bare. The market is ever changing and the spread of value comes naturally from what one wants vs the inherent bias in us to pay as little as we can. Hope that helps.
Jayath Vidanage (2 years ago)
What you just asked made know sense, if it was 5.9 ask and 5.98 bid there is a spread
Huda Hashmi (2 years ago)
So essentially you profit when the bid price overtakes the ask price right? For example if I bought x number of shares at 50.98 (ask) and kept them for a while and the bid price climbs to say 51.50? Please help me in this regard.
Nitin Shinde (2 years ago)
very helpfull videos
George Hundley (2 years ago)
I think *1STMILLIONROAD* is better than this to make money.
matt gonzalez (3 years ago)
so say a stock is selling at 100 a share and the bid is 99.00.. when buying if I keep that stock I'm already making a dollar off it correct???
matt gonzalez (3 years ago)
+Sasha Evdakov (TradersFly) ok got it now thanks Sasha all your videos are great by the way... thanks again
The Winner (3 years ago)
Why do they teach us in manuals that when you place a market order you get the stock at the current market price yet according to this video you are saying we would get the stock at the current ask price on a market order not the current market price that is confusing. If GOOG is setting at 150 market price 152 ask 148 bid and I place market order do I pay 150 or 152? Why is it called a market order and not an ask order then ?
The Winner (2 years ago)
I never traded drys because it was the shipping leader. I traded dcix i think it was and nwbo safer plays yesterday today not trading because I knew yellen was speaking today
TradingKid1998 (2 years ago)
+The Winner SEC announced they would halt $DRYS and resume 10:30am. So I managed to find 10 shares to short for a quick minus 20% short. got scared out of my pants and then covered. stock went MINUS 80% today.
The Winner (2 years ago)
I know some rich traders that actually buy off level 2 on stocks with 30 cent spreads they buy short on the bid and sell within a second and instantly sell on the ask for 30 cent profit but it's hard to pull off
Kyle T. (3 years ago)
The one thing that I don't understand and am unsure about is if instead of placing a "market order" for a current $2/$3 bid-ask hypothetical stock, let's say I place a "limit" order in which I only want to sell my stock at $4. When the "ask" price finally gets to my $4, does that mean that I am actually going to receive the $4 for my stock, or is the price I will receive going to be whatever the "bid" price (let's say it's $3) is at the time that my $4 "ask" price is the current lowest "ask"? Because from what I've read and seem to understand about the bid/ask price is that there is always some sort of discrepancy between the bid/ask-- the "spread"-- so the "market makers" can make their little profit. I'm hoping you can help me sort this out, it would be greatly appreciated. Thanks a lot.
GREBOUTOU théophila (3 years ago)
thank you so much
General Vergel (3 years ago)
Can i sell my stock at ask price?
L-dubwesson (3 years ago)
Please help me understand this, anyones help would be appreciated, I know the answer is a very simple straightforward one I just can't find it. Heres an example: Bid is 20.87, ask is 20.88. Bid/ask size are both at 0. That's it.  I know the size means (ask size for instance) how many shares available at that price before changing at a higher rate if buying at market order, but what does 0 mean? Does it mean no shares are available for purchase? Does it mean as many stocks as you want are available at that price? Please answer, new to common stock trading and this threw me a curve ball. Cant find the info anywhere on what a "0" bid/ask size means.
EvilSapphireR (3 years ago)
+L-dubwesson I'm interested in knowing this. Did you get the answer? Bid/ask size being 0 does seem unclear.
L-dubwesson (3 years ago)
+Sasha Evdakov In short lets say there is a share right now for: Ask 20.00 x 0  Bid 19.00 x 0 I place a market order for 250 shares. What would I be paying not including broker transaction fees? $5000? Or because the size is 0 would I not be allowed to place the order? Or would the price rise slightly with each share like it would with a size of 1?  And if I were to instantly sell at those prices for examples sake, would I get 19 a share or not be able to sell at all because the size is 0. 
L-dubwesson (3 years ago)
+Sasha Evdakov I understand that, like I said i know what size means, I just don't know what "0" specifically means.  Like in your example I will use 0 Guy screaming "buy my oranges 0 for $2" I wouldn't know what that would mean in real life either??? Am I missing something? I feel like I understand your examples, I just also feel my question about 0 being the size wasnt answered?  I'm really not trying to be difficult or argumentative, I was just looking at some stocks that I'm interested in that I think will do well in the future, and currently the ask and bid sizes are 0, but the ask and bid prices are in the 20-30's. 
MostlyLoveOfMusic (4 years ago)
Good video - I always wondered where the value of the difference went
Harlem World (4 years ago)
Wow this was the easiest learn how I have ever seen. Thank you. I thought I would have to watch multiple vids to understand it.
Charles Hart (4 years ago)
+Sasha Evdakov Thanks for the explanation very good and concise.
Ginger Willis (4 years ago)
Pakasuni jo (4 years ago)
Hi, thank you so much just love it!!!!!! can you make a tutorial on MACD?
Martin Lo (5 years ago)
May I ask who are the market makers? How do they actually make money through the bid-ask spread? Because I was thinking the brokers only earn the tax per transaction.
Martin Lo (5 years ago)
Alright i got it! Thanks alot Sasha! 
Michael Perry (5 years ago)
You should have been a teacher.  Are you a Teacher? Thank you for breaking down what all the terms are and putting it in term where the average Joe can understand it. 
Michael Perry (5 years ago)
I'm going to ride Tesla for the long term and dollar cost average the stock as I do with my mutual funds. So, I plan on purchasing more on the dips. Today is a good day to purchase more of the stock as far as I'm concerned some may see it different. Not going to try and time this one. 
Michael Perry (5 years ago)
You are good at what you do. Just got finished listening to some of your teachings. Wonder what you think about Tesla Motors, and JKS
PlayDead77 (5 years ago)
Hey Sasha. I'm trying to understand the bid and ask here, but I'm having issues grasping the concept. If the ask is what you would essentially pay for buying, why do you receive the bid (which is lower) when you sell? Also, why, when you get a quote, do you see the bid and ask, but pay something else for a stock? Thanks in advanced!
PlayDead77 (5 years ago)
I think I understand. Thank you very much for your time.
PlayDead77 (5 years ago)
Oh ok. Thanks for getting back to me quickly btw. In essence, the bid and ask we see are just numbers to by then. Meaning that's not exactly what you'll get but an approximation?
PlayDead77 (5 years ago)
But since ask is always higher than bid, and you pay the ask, shouldn't that ask go to whomever sold you the stock? You know, instead of the bid?
motion911 (5 years ago)
u did not explain with the price there is a / # what is mean
motion911 (5 years ago)
Sasha, can u explain 0.01/560 to the ask 0.01/99   does that mean everybody wants to get rid of it?? how much would i have to buy to over take that 560
motion911 (5 years ago)
+Sasha Evdakov yeah now i understand if i spike up a buy of 500k people will see it and not buy. but my theory was for others to see it and come pump and i would get out, also on my td volume page i dont understand a grey bar, thanks for ur help
motion911 (5 years ago)
+Sasha Evdakov Thanks for ur reply! , there is a stock i am looking at the bid is 1 cent (0.01/960) and the ask is 1cent (0.01/99) what is the 960 to the 99 ,avg volume daily traded is 250 . if i invest 5000 canadian i get 500k stocks, would i get all the bids of the table making me the top guy for the stock making the price go up since such high volume was traded and it would attract people to push it higher? i hope u understand my question 

Would you like to comment?

Join YouTube for a free account, or sign in if you are already a member.