Best Bid

DEFINITION of 'Best Bid'

The highest quoted bid for a particular trading instrument among all those offered by competing market makers. The best bid is effectively the highest price that an investor is willing to pay for an asset. A bid is an offer made by a trader, investor or other industry professional to purchase a security. The bid specifies both the price that the buyer is willing to pay and the quantity of the security that is desired. Bid also refers to the price at which a market maker is willing to purchase a security. Best bid is the opposite of best ask.

BREAKING DOWN 'Best Bid'

The National Best Bid and Offer (NBBO), which refers to the Securities and Exchange Commission (SEC) requirement, are the bid and ask prices that traders and investors typically see. They are required by the SEC to be the best bid and ask prices available to customers. Active traders, short-term traders and day traders often study Level 2 quotes that include all the bids and asks for a particular trading instrument. The NBBO is continually updated throughout the trading session so that customers have access to these prices.

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RELATED FAQS
  1. What do the bid and ask prices represent on a stock quote?

    Learn what the bid and ask prices mean in a stock quote. Find out what represents supply and demand in the stock market and ... Read Answer >>
  2. What do the numbers that follow the bid and ask numbers in stock quotes represent? ...

    When looking at stock quotes, there are numbers following the bid and ask prices for a particular stock. These numbers usually ... Read Answer >>
  3. Why are the bid prices of T-bills higher than the ask prices? Aren't bids supposed ...

    Yes, you are correct that the ask price of a security should typically be higher than the bid price. This is because people ... Read Answer >>
  4. How do day traders capture profits from the difference between bid and ask prices?

    Discover how day traders capture profits from the difference between bid and ask spreads. These spreads blow out during volatile ... Read Answer >>
  5. What is the difference between a quote driven market and an order driven one?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
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    Find out how stocks are traded in the market, why the bid and ask prices are different and why the bid-ask spread is smallest ... Read Answer >>
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