The two sides of a quote
Buyers post the prices they are willing to pay, and the highest of these is the best bid. Sellers post the prices they are willing to accept, and the lowest of these is the best ask. The best bid and best ask together form the quote, a snapshot of where buyers and sellers currently stand. The remaining orders, those behind the best prices, make up the order book.
Which price applies
The two prices are not interchangeable. A participant buying immediately generally pays the ask, the price a seller is asking, while a participant selling immediately generally receives the bid, the price a buyer is offering. The difference between the two is a cost of trading, which is why the gap between them, the spread, is closely watched.
Bid, ask, and the last price
The quote is distinct from the last price. The bid and ask represent intentions, the prices at which participants are willing to trade. The last price is the price at which the most recent trade actually occurred, typically near the current bid and ask. A quote can change continuously even when no trades take place, as participants revise their orders.
What moves the bid and ask
Both sides respond to supply and demand. As buyers become more willing, the bid rises; as sellers become more willing, the ask falls. Liquidity determines how far apart they sit: in a deep, active market the bid and ask are close together, while in a thin market they can be far apart. That distance is itself an indication of how easily the asset can be traded.
Quotes on SiftingIO
SiftingIO normalizes pricing across stocks, forex, crypto, and commodities into one schema, so the bid, the ask, and the values derived from them are represented consistently in every market. For markets without a single central venue, the aggregated fair price reconciles quotes from several independent sources into one representative value rather than the bid and ask of a single venue.