How to Bid and Ask Price

I decided to research this further to see what exactly a bid and ask price is for a stocks price.If your one of those people who watch a stock all day go up and down you’ve probably wondered why the ask and bid price continues to change and often a higher biding price forces the asking price up but not always.

Instructions

Step1
irst off the difference between the bid price and the ask price is called the spread.In normal stock market trading on the New York Stock Exchange or NASDAQ, the ask price is the lowest price a seller of a stock is willing to take for a share of that given stock. For over-the-counter stocks, the asking price is the best quoted price at which a Market Maker is willing to sell a stock.
Step2So the real factor that changes a stock price:What makes a stock go up and down? Supply and Demand* People who want to sell decide how little they will accept.* People who want to buy decide how much they are willing to pay.
Step3You have to imagine someone who has owned a stock for say 10 years vs someone who has owned that same stock for 10 days. Depending on the amount of shares they may have different decessions to make but the person who has owned the stock for 10 years might have bought the stock when it was $1 and now the stock is trading at $20 a share. Then the other person might have bought the stock at $18 and its trading at $20. Obviously if the stock goes down to $15 its most likely that the guy who bought it 10 days ago might try to dump it and get out, whereas the guy who bought the stock 10 years ago has been through ups and down and he might decided not to sell unless it goes down to $14 or he will simply wait it out until it goes back up past $20. This is also why stocks that are in high demand like Google and Apple (Goog and AAPL) have high stock prices over $100 a share. This weeds out penny stock players and allows the market to grow for those who can afford the higher stock price. The other factor is that there is only so much stock issued and if GOOG had a price of $1.00 everyone would buy it and even though some trades would only be for $100 it would be difficult to monitor Supply and Demand - so companies try to make stock prices for all walks of life. That’s really why the rich get richer. Sure a guy with a hundred thousand could easily turn it into a million overnight but someone with million could diversify and make a steady growth of say 5-10% over a long period of time. The guy with $100,000 could easily loose that investment overnight as well. I like the stock THC TENET HEALTHCARE…last trading at $1.22 (3/26/09) lookup JEB BUSH and his ties with THC.