Bid, Ask and Spread in Stock Market

commodity market training

In the previous blogs, we discussed what is bid and what is ask. We discussed them as, bid is considered as the price at which the actual stock price is valued, whereas the price of the ask is the price that one buys the shares and it includes the real value of the stock and also the execution of the stock price that is charged or paid for the mediators or the personnel, who work on the floor.

There is a difference between the prices of the bid and ask. The question is, where does this difference amount go and who gets the difference value.

So, the question is, what is the bid-ask spread. It is simple; the difference amount of the ask and bid price is considered as the bid-ask spread. For example, let us consider the same share, for which the bidding price is 50 90, and the asking price is the 50 98. Here the difference price is the 8 cents, and it becomes the bid-ask amount that is used for the servicing charges of the stock that are exchanged from one owner to the next proprietor.

As the magic that one, unfortunately, the shareholder has to follow. When buying the stock in the form of the share, one has to pay more money, which is at the asking price. And when the same person sells the share, the shareholder has to buy at the lower price, which is at the bidding price. This is not the loss, happens to the shareholder every time. It happens only when the shares are bought and sold immediately and instantly.

No matter you are going to benefit, or not the people, who are working on the stock exchange are going to charge for the services that they are providing. The bottom line for this current trading and sharing of the stock is that the user or the shareholder is going to lose for a certain amount of money, and that increased, but used for a meaningful purpose.

As a shareholder, you need to be very conscious of the difference value or what we called it as the bid-ask spread is going to be critical. It might be less for one share, but considerably more amount, when there is a dealing of multiple stocks, as the count of the shares, reach hundreds or the number of the shares reaches thousands of the shares. These prices do occur in every country and every stock exchange. But there may be a difference in the difference amount, like in the bid-ask amount. The difference price may change for different countries and also for various stock exchange trades in the same region. Before you go for or enter the stock exchange field, you should be aware of these new prices that you have to spend, while trading your stocks. Whatever the share you purchase, make sure you read every single piece of information.