The ask price (also known as the offer), is the lowest price that a seller is willing to offer (sell) goods or services. In this definition, it is related to financial instruments or products such as securities, commodities, or foreign exchange to name a few.
When viewing financial price quotes these will be displayed as two numbers. For example, EUR/USD may be quoted via a live broker or trading platform as 1.1230-1.1231.
Using the above example, the ask price or simply the ask would be 1.1231 which is the lowest price available in the market at which a seller is prepared to sell EUR/USD. The lower number quoted is the bid price and is the highest price at which a buyer (the bidder) is prepared to buy.
The difference between the two prices above is referred to as the bid/ask spread or more commonly just the spread. The closer or tighter the spread, the more beneficial this is to traders as they are then not losing trading profit by having a large differential between the two available trading prices in the market.
Key takeaways:
- The ask price is the lowest in the marketplace that a seller will sell or offer a financial instrument at.
- The difference between the ask price and the bid price is known as the spread.
- The ask price is normally higher than the bid price.