Bid Price

The bid price represents the highest amount that a specific bidder will pay for a specific commodity or service. In the financial markets, it refers to the cost that customers are prepared to pay for a certain good like a commodity, security, or cryptocurrency. A trade order book is made up of numerous bid prices (on the side of buyers) and asking prices (on the side of sellers). The difference between the highest bid price and the lowest asking price—which is always lower—is known as the bid-ask spread. In order to sell their assets or stock holdings, traders and investors must either accept one of the order book bid prices (ideally the highest one) or establish an asking price and wait for a buyer to eventually bid against it, filling the order. On the financial markets, traders have the power to decide the price at which they are willing to buy or sell an asset, and they do so as soon as they submit their order. Obviously, if the price they choose is too different from the going rate, their order won't be filled. A "bidding war" would occur if numerous purchasers were competing for the same item and started putting in bids one after the other. Buyers boost their offers incrementally to match those of other competing bidders in a bidding war, which usually results in a significant increase in the asset's market price.