I don't understand how a stock has a trading price of 5.97, but when I buy it I have to pay the asking price of 6.04. How can I be paying more than what the stock is trading for?

By Investopedia Staff AAA
A:

It might seem logical that the last traded price of a security is the price at which it would currently be trading, but this rarely occurs.

The market for a security (or its trading price) is based on its bid and ask prices, not the last traded price. Investors can use the last traded price to gauge where the market is and what people have done recently, but once this price is posted, it is not the actual price you will pay if you decide to buy the security.

When you place a market order, you are asking for the market price, which means you must buy at the lowest ask price or sell at the highest bid that is available for the stock. You can ask your broker for these prices - they are normally given to you when you request a quote.

Alternatively, if you really want to buy or sell a stock at a specific price, it may be more advisable to use a limit order to do so. This way, you can be sure that all your buy orders will be filled at a price that is equal to or lower than your specified price level. Conversely, a sell limit order will ensure that your sell order is executed at a price that is equal to or higher than the price level that you want.

To read more, see our article Why The Bid-Ask Spread Is So Important.

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