When looking at stock quotes, there are numbers following the bid and ask prices for a particular stock. These numbers usually are shown in brackets, and they represent the number of shares, in lots of 10 or 100, that are limit orders pending trade. These numbers are called the bid and ask sizes, and represent the aggregate number of pending trades at the given bid and ask price.
- Stock quotes display the bid and ask prices along with the bid and offer sizes for the shares in question.
- The bid is the best price somebody will pay for shares (and where you can sell them), and the offer is the best price somebody will sell shares (and where you can buy them).
- The bid size and offer size indicate how many aggregate shares are available at each of those prices, respectively.
- The order book for a stock will show its depth and liquidity by revealing the next best bids and offers and their sizes.
Stock Quote Information
Using the example above on the left-hand side, assume we get a stock quote for MEOW Corp. and we see a bid of $13.62 (x3,000), and an ask of $13.68 (x500).
As you can see, there are also numbers following the bid and ask prices, and these are the number of shares available to trade at those respective prices. These are known as the bid size and ask size, respectively.
At the current limit bid price of $13.62, there are 3,000 shares available to purchase—and which you can sell to them. This quantity is in fact an aggregation for all buy orders entered at that bid price, no matter if the bids are coming from one person bidding for all 3,000, or three thousand people bidding for one share each. The same is true for the numbers following the ask price.
Depth and Liquidity
Say you would like to buy 3,000 shares of MEOW. You can lift the 500 shares offered at 13.68, but that leaves you with 2,500 shares unfilled. If you have that price as a limit, your bid for 2,500 will become the new best bid price. But if you need a fill right now, you could instead enter a market order.
The figure on the right shows the depth and liquidity in the MEOW order book. As shown, the next offer is for only 20 shares at $13.80, and 60 more at 13.83. You can buy 797 more shares, clearing offers up through $13.95. Then you would get the last of your order filled at $14.00 where there are 2.2 million shares for sale.
MEOW shares don't seem to have a great deal of depth (the next best prices are quite a bit away from each other, e.g. $13.83 followed by $13.87), and not very liquid (i.e., the ask sizes are quite small—up until $14.00).
If these orders are not carried out during the trading day, then they may be carried over into the next trading day provided that they are not day orders. If these bid and ask orders are day orders, then they will be canceled at the end of the trading day if they are not filled.
The spread between the two prices is called the bid-ask spread. If an investor purchases shares in MEOW, they would pay $13.68 for up to 500 shares. If this same investor immediately turned around and sold these shares, they would be sold for $13.62. The six-cent difference would be a loss to the investor.