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investing-basics

What is an Ask Price?

Matthew Levy
Matthew Levy

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

1. Ask Price. SEC.

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.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Brokerage services are provided by Alpaca Securities LLC ("Alpaca Securities"), member FINRA/SIPC, a wholly-owned subsidiary of AlpacaDB, Inc. Technology and services are offered by AlpacaDB, Inc.

This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Alpaca Securities is not registered (Alpaca is registered only in the United States).

investing-basics

Matthew Levy

Matthew Levy is a Chartered Financial Analyst (CFA) designation holder, a former portfolio manager for $600+ MM in assets, and started his own business writing financial analysis for clients worldwide