Bid
Bid is the highest price a buyer is currently willing to pay. It is the best available buy quote in an order book.
Definition
Bid is the highest price currently offered by buyers in the order book. The best bid is the top buy quote you can sell into immediately.
Why it matters
Bid is one side of the bid ask spread. Together with the ask, it defines the midquote, which is the reference point used in effective spread.
How to use it
• If you place a market sell, you will typically execute at the best bid (or worse if depth is thin).
• If you place a limit buy, your order sits on the bid side at your chosen price.
Common pitfalls
Stale quotes: If the book moves quickly, the bid you saw may not be there when you execute.
Thin depth: A good best bid does not mean there is meaningful size available at that price.