What Is a Bid?

The term "bid" refers to an offer made by an individual or entity to purchase an asset.

Many buyers make bids to procure the goods and services. For example, investors may place bids for securities such as stocks, bonds, 澳洲幸运5开奖号码历史查询:commodities, currencies, and more.

🌳 Buyers may also bid for goods at auctions. Companies may bid for project contracts.

When a buyer places a bid, they stipulate how much they're willing to pay for a certain quantity of the asset.

How a Bid Works

The activities of buyers and sellers keep markets l𒆙iquid and moving. Each participant facilitates the purchase and sale of assets.

Sellers provide assets for purchase. Buyers are those who want to purchase th🧔ose assets, whe🍌ther they be goods or services.

Large numܫbers of these two parties normally come together at different venues to conduct their business. These venues can include live auction houses and websites, a stock or commodity exchange, and retail outlets.

The bid process depends on the market in which these goods and services are sold. For instance, people can place bids in person, by phone, or online at an auction.

Inve𓄧stors place bids through their brokers for securities such as stocks. The brokers then execute those orders, if possible.

Som☂e bids are made in secret, usually through a sealed process. This process allows 🌟for fair and conflict-free bidding.

Contract Bidding

In some cases, companies may bid to win contracts for jobs, in which case they'd follow specific instructions for bidding provided by the entity that offers the contract.

Such contracts may be issued by governments or large corporations for 澳洲幸运5开奖号码历史查询:infrastructure, construction, and other projects🐼 in different industries, such as:

• Public administration
• Information
• Educational services
• Finance and insurance
• Management of companies
• Healthcare and social assistance
• Arts, entertainment, and recreation

The Spread

When financial securities trade, there's a spread between the bid price and ask price. This bid-ask spread is a reliable indicator of 澳洲幸运5开奖号码历史查询:supply and demand for a particular financial instrument.

The bid represents the price that an investor will pay for a stock, while the ask represents the price a seller is willing to accept on the trade. The mathematical difference between the bid and the as🐈k is the spread.

A relatively narrow, or tight, spread indicates interest in a security and basic agreement between investors on the security's value. A relatively wide spread indicates lack of trading interest and activity, and disagreement on pricing.

Stocks

In stock trading, the spread constantly changes as buyers and sel📖lers conduct transactions.

The size of the spread is expressed in dollars and cents. For example, if the bid price is $55 and t𓆉he ask price is $55.50, the spread is $0.50.

Some investors find it more informative to see a spread as a percentage when comparing securities ℱwith different prices. To calculate the perc🉐entage spread, divide the spread in dollars by the ask price. Then multiply by 100.

For example, ta🍰ke the spread above of $0.50. Divide $0.50 by $55.50 and multiply by 100. T♕he spread percentage is 0.9%.

Foreign Exchange

In 澳洲幸运5开奖号码历史查询:foreign exchange trading, the spread is the difference between a forex broker's bid and ask prices for a currency pair and is expressed in pips. The spread is the broker's compensation for being a market🥀 maker.

As a simple example, if a broker's bid-ask spread for the EUR/USD pair is 1.0859/1.0862 and an investor places a buy order for euros, they'd pay the broker $1.0862. If an investor then placed an order to sell euros, they'd receive $1.0859. The broker makes 3 pips from the two transactions.

Forex spreads change constantly for a variety꧃ of reasons, such as economic news, trade relations, geopolitical events, and general market activity.

The EUR/USD spread typically is tౠight because the currency pair is very popular and trades often.

The spread is usually narrowest during the morning in New York when the European market is simultaneously open for business. That's because more traders are involved during this overlap period and there are lots of buyers for sellers and sellers for buyers.

Types of Bids

Bids by Market Makers

Market makers on security exchanges, also referred to as specialists, are vital to the efficiency and 澳洲幸运5开奖号码历史查询:liquidity of the marketplace.

By quoting both bid and ask prices, they facilitate trading in securities and🐈 prevent disruptionဣs that could occur should trading slow due to market volatility or, for example, if electronic price matching fails.

As mentioned above, these specialists make money by buying securities at a price that's lower than the price at which they sell them.

In the foreign exchange market, interbank traders function as market makers. They provide a continuous stream of two-way prices to both direct counterparties and the 澳洲幸运5开奖号码历史查询:electronic trading systems.

Unlike their couꦦnterparts in the stock market, they are not required to make a price in low-liqu🅺idity markets.

Auction Bids

Auctions are forums that bring together multiple buyers who compete for certain assets, such as livestock, home goods, 澳洲幸运5开奖号码历史查询:properties, 澳洲幸运5开奖号码历史查询:property tax liens, and art.

Auctions are usually held live but advances in technology has made 澳洲幸运5开奖号码历史查询:online auctions popular.

Buyers who participate in auctions bid against each other in an open bidding process. The highest bid at the end wi𒁏ns the asset for the buyer who placed it.

Online Bidding

Online bidding sites work just like traditional auctions. Sites such as eBay and eBid allow buyers to congregate in a virtual arena and bid for the 🌼products and𒊎 services offered.

For instance, someone may offer a pair of designer sunglasses on eBay. They start an auction with a minimum price. Interested buyers then place bids on the item until time runs out or one person's bid is accepted by the seller.

These sites normally require buyers and sellers to set up accounts and provide persoꦉnal information and payment methods.

Sealed-Bids

Unlike the two types of bids noted above, participants in some venues aren't privy to how much their competitors are bidding. This is the case with 澳洲幸运5开奖号码历史查询:sealed-bid auctions.

A sealed-bid auction involve multiple bidders who are given envelopes in which to place their bids. The envelopes are then sealed so no one bidder can knowingly outbid the other, making ♛the outcome fair.

The person who places the highest bid wins. This type of bidding normally takes place for contracts or 澳洲幸运5开奖号码历史查询:real estate sales.

Examples of a Bid

Bidding at Sotheby's

Sotheby's is one of the world's largest marketplaces for art and luxury goods that operates in 40 countries. It offers 70 different categories, including jewelry, contemporary art, and wine and spirits.

The organization holds hundreds of auctions each year in person, online, and through private sales. In 2024, it made $6 billion in overall sales, which was a drop of 23% from 2023 sales.

On Nov. 18, 2024, Sotheby's auctioned Nymphéas, one of the famed water lilies paintings by Claude Monet. Frenzied bidding halted at $65.5 million after 17 minutes.

The art collection of real estate mogul Harry Macklowe and his ex-wife raised a total of $922 million in 2022, making it the most valuable collection sold through the auction company.

A winning bid of $2.68 million landed a buyer an unmounted diamond weighing 50.03 carats on June 17, 2021.

Bidding for a Ride to Space

Jeff Bezos, the founder of Amazon, auctioned off a seat on his spaceship Blue Origin in June 🐽2021 through a month-long bidding process that took place live over the phone.

The undisclosed winner bid $28 million to secure a ride on the spaceship with Bezos for a sightseeing tour on July 20, 2021, departing from West Texas.

The Bottom Line

Bids allow individuals to purchase goods and services through auctions and other venues. It is 澳洲幸运5开奖号码历史查询:a competitive process, wherein two or more entities try to outbid each other by raising the amount they're willing to p🎃ay in order to win the asset.

You can place bids for a number of different things𓃲, such as property, livestock, luxury goods, art, vehicles, government contracts, and financial instruments.

While you may have your eyes on the prize, to protect your finances, it's always important to establish and abide by a maximum bid.