Bid size in investing is often an important number for traders selling a significant amount of shares. Here’s a more in-depth look at what bid size is, how it works, and where you can find it.
Definition and Examples of Bid Size in Investing
Bid size in investing is the amount of shares an investor is willing to buy at the best current bid price. Bid sizes are presented in lots, which are typically 100 shares. The bid size will often be shown next to the bid price. Let’s say you have 2,400 shares of Target stock to sell. You check the current bid price and size on an exchange platform or some financial sites. Say, for example, you saw the current bid price was $221.60 and the bid size was 900. (Some websites/brokerages will show this information as $221.60 (9)). So, in this hypothetical scenario, If you enter a sale order for 2,400 shares, you know that 900 of them could be purchased for $221.60 per share. To figure out the price you could sell the rest of your shares, you’ll need to get a Level II quote on bid price and bid size.
How Bid Size in Investing Works
Bid size in Level I quotes shows the size for the best current bid prices, other current bid sizes can be found using Level II market data. These programs show an entire market depth picture for a stock, including sizes of bids and asks, and their prices. Here is a hypothetical example of Level II information you may find: This is a microcosm of how the market works. There is more selling pressure (2,400 shares) than buying pressure (900), so the stock price would fall. Of course, this happens hundreds or thousands of times per day, and much of it is a result of professional market makers or high-speed trading funds. In the above example, it is likely a market maker that puts in the limit order book that becomes the market depth picture above. The market maker buys your shares immediately, then sells them later on at the ask price, earning money on the spread. Without the market maker, there may not be another trader willing to buy at your price.
Bid Size vs. Ask Size
Ask size is the opposite of bid size. It is the amount of shares someone is willing to sell at the best possible ask price. Traders can use ask size in a similar way to bid size. Traders looking to buy a stock can use ask size to see what the price and number of shares available are. In investing, bid price is the price a buyer is willing to pay and ask price is the price a seller is willing to take. The difference between the two is called the spread.
