Bid Size

What Is Bid Size?

The bid size addresses the quantity of a security that investors will purchase at a predetermined bid price. For most investors, who view level 1 quotes on their trading screens, the bid size addresses the amount of shares that investors will purchase at the best accessible bid price.

How Bid Size Works

Bid sizes are regularly shown in board lots addressing 100 shares each. Thusly, in the event that a level 1 quote shows a bid price of $50 and a bid size of five, that means that the best accessible offer from investors hoping to buy the security is $50 per share to buy 500 shares. An investor who possesses that stock could thusly sell up to 500 shares at $50 per share.

Bid size is something contrary to ask size, where the ask size is the amount of a specific security that investors are offering to sell at the predetermined ask price. Investors decipher differences in the bid size and ask size as addressing the supply and demand relationship for that security.

Notwithstanding the best accessible bid price, there will frequently be a lot more bid prices accessible at lower prices, each with their own bid size. This extra data can be seen utilizing level 2 market citations.

Real World Example of Bid Size

For instance, in keeping with our security above, there may be a bid size of 10 (1,000 shares) at a bid price of $49. In that scenario, an investor wishing to sell 1,500 shares could sell them at a combined cost of $74,000 ($25,000 from the initial 500 shares, plus $49,000 for the excess 1,000 shares).

Level 2 quotes are required to see the data concerning bid prices and bid prices below the best accessible bid. This data is normally accessible as a premium feature in most brokerage accounts.

The purpose of this "depth of market" (DOM) data is to give understanding into the size and structure of liquidity for the security. For example, in our model above the facts may confirm that subsequent to selling 1,500 shares the next best bid price would be a lot of lower, say $40.

In this scenario, an investor who sells altogether in excess of 1,500 shares would make the market price of the security fall forcefully. Such an investor might decide to postpone not exclusively to get a better price, yet in addition to abstain from making the price of their leftover shares decline.

Features

• Bid size is stated in board parts addressing 100 shares each. Subsequently, a bid size of four addresses 400 shares.
• Bid size addresses the quantity of a security that investors will purchase at a predefined bid price.
• Level 1 citations will just show the bid size at the best accessible bid cost. Level 2 citations show depth of market data on many layers of bid prices and bid sizes.
• Bid sizes are important in light of the fact that they mirror the demand and liquidity of a security.