It's all in the price
A whole section covering the bid and offer price, mid-price and the traded price of shares.
You walk into a shop and ask for a tin of beans and you'll pay a set price - the price quoted in the supermarket on the day you do your shopping.
Log onto the internet and buy shares and you could be quoted one of four different prices.
Confusing huh?
The two most important are:
The bid price – the price at which you can sell shares on the market.
And
The offer price – the price at which you buy shares.
The difference between them is known as the Spread.
As you will see later the spread may be vital determinant to whether you buy certain shares or not.
That difference between the bid and offer price also represents the profit made by a specialist share dealer, known as a market maker.
We said a share could have four different prices.
The third is the Mid price.
This is the middle point between the bid and offer price and is the price quoted in the financial pages.
And finally, there's the Traded price – the price at which shares are actually bought and sold. While you should keep you eye on the mid-price, particularly when you are researching a stock, the bid and offer price are most important to online share dealers.
You will see the bid and offer quoted on websites such as ADVFN and Digital Look.
More important, bid and offer prices will be quoted when you are logged on to your internet stockbroker and ready to buy or sell shares.