The term "Bid and Ask" is used to describe a two-way price quotation. This is the best potential price that a security can be sold and bought at a given point in time. The bid price represents the maximum price that a buyer is willing to pay for a share of stock or other security. The ask price represents the minimum price that a seller is willing to take for that same security.The purpose of having both bid and ask prices quoted simultaneously is so that buyers and sellers can transact business at the most advantageous prices possible. In order for buyers to make informed decisions, they need to know what other people are bidding (the highest offer) as well as what sellers are asking (the lowest offer). Sellers, on the other hand, need to know how much demand there is for their product in order to set an appropriate asking price.It's important to remember that these prices are always changing; if demand increases then so will the ask price, and vice versa. It's also worth noting that not all securities have active markets with multiple bids and asks - some may only have one or two offers at any given time.
