Stock Investor/Trader Glossary: The Bid Price
The bid price represents what buyers are willing to pay for that particular security and the bid size represents how much a trader is willing to buy at that specific price.
The size for stocks is in multiples of 100 so for the size of 100 one would multiply by 100 to get 10,000 shares on the bid.
What that is saying is someone is willing to buy 10,000 shares at a fixed price and not a 1 cent more.
Following the bid size is important because it will tell one where big buyers are stepping in and at what price.
So, when you know where the big orders are going in at then you know that is an important price mark and something you will want to keep an eye one for a possible trade opportunity.
Sometimes you will see the bids reloading where sellers are trying to take the bid out but new bids keep coming in to hold the price there.
You can also watch time and sales data to see whether orders are getting filled on the bid or ask which is important because knowing if the sellers are being more aggressive and hitting the bid it could indicate prices are going lower.
When “Buying the Bid”
Placing a buy limit order on the current bid, or “buying the bid”, does not mean you are guaranteed to get a fill there, it means that you are bidding at the highest price at that moment.
Notably, there will have to be a seller willing to sell down to your bid price in order for you to get executed aka filled.
So say you are the best bid at $XYZ.
That means that someone who is looking to sell shares would have to sell at that price or lower for you to get filled.
Sometimes a buyer can only get a partial fill where he/she will only get a portion of the order executed. If you were trying to buy 1,000 shares, but a seller came in with only 500 at that price and then bids came in higher than your price you would only be filled on the 500, leaving the with an open order of 500 shares.