What is an Ask Price?
An ask, or ask price, is the lowest price that a seller is willing to receive for an asset.¹
What is the ask price?
The ask price and bid price are generally mentioned together, with the ask being higher than the bid.² Sellers can place quotes in a trading platform indicating the price they are willing to sell the asset. When there are multiple prices offered by different sellers, the lowest price would be considered the ask price.
When there are more sellers and the demand for the security is low, sellers will lower their ask (offer) price to attract buyers.³ If the demand is high, sellers may raise the ask price.
An ask price may be a factor used to help determine how liquid a security is. If the difference between the bid and ask, also known as a spread, is low, then the asset is considered liquid in nature.
Example
Claire is offering to sell her house for $1.5 million. This would be considered the “ask” because as the seller, this is the minimum price she is willing to accept for her house.
Sources
2. Ask Price. Investopedia.
3. Bid and Ask. Investopedia.
Please note that this article is for general informational purposes only. All examples are for illustrative purposes only. The views and opinions expressed are those of the author and do not reflect or represent the views and opinions of Alpaca. Alpaca does not recommend any specific securities or investment strategies.
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