Trading in markets such as stocks, futures, forex, and options involves three separate prices that update in real time when markets are open: the bid price, the ask price, and the last price. These prices provide important and up-to-date information about the pricing of the relevant market.
Bid Price
The bid price represents the highest current buying price in the market. The ask price is the lowest current selling price or the lowest price someone is willing to sell for. The difference in price between the bid and ask price is called the “bid-ask spread.”
Last Price
The last price represents the price at which the last transaction occurred. Sometimes, this is the only price you will see, such as when checking the closing prices for the evening. All of these prices show traders the points at which people are willing to buy and sell, and where the latest transactions took place.
Understanding the Basics
In daily trading markets, the bid price, ask price, and last price provide important and up-to-date information about market pricing. The bid price is the highest price a trader is willing to pay to buy (buying a stock and waiting for a higher price) at that moment. The ask price is the lowest price someone is willing to sell the stock for (at that time). The last price is the price that most charts are based on. The chart updates with each change in the last price.
Frequently Asked Questions (FAQs)
Should I buy at the bid or ask price?
If you are trying to buy a security, your bid price should match the ask price of the seller. In that sense, you are buying at the ask price, and the seller is selling at your bid price. The difference between the bid and ask is referred to as the “bid-ask spread.” Popular stocks and exchange-traded funds have narrow spreads, while wide spreads can indicate a lack of liquidity.
Is the last price the same as the market price?
The last price is the price at which the last transaction occurred, while the market price is any price the broker can find to execute your order as quickly as possible. If you are buying a stock, the market price is the ask price at that moment. If you are selling, the market price is the bid. It should be noted that these prices can change rapidly, even in the seconds it takes to fill out an order form.
Source: https://www.thebalancemoney.com/trading-definitions-of-bid-ask-and-last-market-prices-1031026
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