DEFINITION of 'Best Bid'

Best bid is the highest quoted bid for a particular security among all bids 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, is a list of the currently available best bids and offers available on exchanges and 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 list is continually updated throughout the trading session so that customers have the ability to see the best available prices as they move throughout the day.

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    These numbers are called the bid and ask sizes, and they represent the aggregate number of pending trades at the given bid ... Read Answer >>
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    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
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