What are bid and ask?

Why do you see one price when you tap “buy” and a different one when you tap “sell”? Think of a secondhand market: one person says “I’ll pay up to this much” and another says “I won’t let it go for less than that.” On an exchange, these offers are collected in the order book.

Each buy order has its own bid price and each sell order its own ask price. When the screen just shows bid and ask, it usually means the best available prices: the highest buy offer and the lowest sell offer.

Say that, on a hypothetical crypto/euro pair, the best bid is €99 and the best ask is €100. If you want to buy right away, you meet the seller at €100. If you want to sell right away, you meet the buyer at €99. These prices apply only to the quantity available at each level.

Why it matters

The difference between the two prices is called the bid-ask spread. In our example it’s €1. If you buy and immediately sell the same amount, with unchanged prices and enough quantity available, you lose that difference, before any fees.

The last traded price you see on the chart isn’t necessarily the price you can trade at right now. We find it more useful to look at the available prices and quantities together, rather than just the big number at the top of the screen.

What to watch out for

The main trap is perspective: to buy instantly you look at the ask, to sell instantly you look at the bid. The bid is the buyer’s offer; it’s called that because it reflects what buyers are willing to pay, not because that’s the price at which you necessarily buy.

A market order can be filled across several price levels if its size exceeds what is offered at the best price. A limit order sets your price limit but doesn’t guarantee execution. Also, the spread isn’t the exchange’s fee: fees are charged separately.