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A bid is an offer investors make to buy a security.

Think of it as the price set by the buyer, or the highest price a buyer is willing to pay for a security. The bid price in a market is the highest price offered for that security.

The bid is opposed by the ask, which is the price the seller wants for a security, or the lowest price the seller will accept for it. The difference between the bid price and the ask price is called the spread.

For example, an investor bids $25 per share on 100 shares of Company ABC’s stock. The transaction is completed if an ABC stock seller accepts the bid price.

If the seller had asked for $28 per share, negotiation would need to take place for the sale to happen.

Investors may bid a price below the ask and wait for the seller’s price to match, or not buy it at all if the price stays higher.

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