Inside Quote


DEFINITION of 'Inside Quote'

The best bid and ask prices offered to buy and sell a security amongst the competing market makers. The inside quote is the prices at which at which market order will be executed. If it is a sell order, a market order will be executed at the inside bid price. For a buy order, it will be executed at the inside ask price.

BREAKING DOWN 'Inside Quote'

Many retail investors do not realize that the price of a security displayed is actually only the price at which the last trade occurred. If the market for a security is highly liquid and trading is frequent, then this may be a good indication of the current fair market value of the security. However, in less liquid securities, it is important to consider the inside quotes at a given moment, since the last trade may have taken place some time ago, and thus may not be indicative of the current market prices. When trading a less liquid security, traders often use a "limit order to avoid being surprised by the price at which the order executes."

  1. Spread

    1. The difference between the bid and the ask price of a security ...
  2. Ask

    The price a seller is willing to accept for a security, also ...
  3. Locked Market

    A market in which a stock's bid and ask prices are identical. ...
  4. Bid-Ask Spread

    The amount by which the ask price exceeds the bid. This is essentially ...
  5. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  6. Market

    A medium allowing buyers and sellers of a specific good or service ...
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