So if the last price is 50, and the bid and ask is say 46 / 57 why should I bid 47/48/49 instead of 50 and above??
The market is an auction. The bid is the highest amount that someone is willing to pay for the stock and the ask is the lowest that someone is willing to sell the stock for. If the quote is 46x57 and you are the highest bid at 46, why would you bid against yourself and offer 47 or 48 or even 50 when at 46 you will be the first one to buy the stock if a seller decides to trade at the market? If another person raises his bid above 46, becoming best bid then all you have to do to become first in line again is to raise you bid above his.
Reason being bidding at a price lower than the last would result in a depreciation of the stock (which does not serve my interest since I have gone long on the security) whereas bidding at the last price evens out resulting in no movement and bidding higher, in an appreciation which is what I desire??
Here's a silly hypothetical for you. If you could buy this stock for 75, would that mean that overpaying served your interests, making the stock more valuable? If everyone else is only willing to pay up to 46, all you accomplished was throwing away money.
I would like to find out. Is there a reason the bid price should be lower than the last price?
Suppose yesterday the price was 50x61 and one trade occurred at 50 (the last price). Now the market drops 3 points and the bid is now 46x57. The bid is lower than the last price of 50.
Suppose the quote yesterday was 50x57 and one trade went off at 50, taking out the one bidder above 46. Now the quote becomes 46x57 with a last trade of 50 (bid lower than last price).
Do you see the pattern here? The market reflects the current auction and the last trade has nothing to do with it.
FWIW, it's generally a good idea to avoid stocks with such wide spreads. In this case, trading at the market means that you have an 18% paper loss from just taking a position.