Bid Price

The highest price at which a potential buyer is willing to pay for a security is known as their bid price.

In the world of stock exchanges, the buyer also has a say in what price they will pay for a security. The price set by the buyer is the bid price. When an investor decides that they want to buy a security, they do not have to buy this security at market price. The investor can choose to use a ‘limit order’ to specify to their broker that they want to buy the security, as long as it's under a certain price.

If an issuer wishes to sell a security, they can choose to use a ‘limit order’ to communicate to their broker that they will be willing to sell their security, given that is above a specified price rather than offering the market price.

Potential investors can specify their bid price, which indicates to their broker that they would like to execute a trade. This trade does not necessarily have to be executed immediately – or ever - but the seller be secure in the knowledge that they did not make less than intended.