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Is there any expression like "sell on bid"? Or is it only "sell on ask".

I m learning stocks right now, my coach telling "we just sold on ask".

so I wonder if there is the opposite - "sell on bid"?

  • I found this... quant.stackexchange.com/questions/9257/… But I am not sure if it answers your question. Doesn't your coach allow you to ask questions about what he/she means? – Jack Swayze Sr Dec 1 '15 at 5:17
  • It usually goes like this.. you buy the ask, you sell the bid but there are variations in between. – NuWin May 29 '17 at 2:24
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Bid and ask prices are the reigning highest buy price and lowest sell price in the market which doesn't mean one must only buy/sell at thise prices. That said one can buy/sell at whatever price they so wish although doing it at any other price than the bid/ask is usually harder as other market participants will gravitate to the reigning bid/ask price. So in theory you can buy at ask and sell at bid, whether or not your order will be filled is another matter altogether.

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It's good to ask this question, because this is one of the fundamental dichotomies in market microstructure.

At any time T for each product on a (typical) exchange there are two well-defined prices:

  • the bid = the highest price at which any market participant has expressed a willingness to buy the product
  • the ask = the lowest price at which any market participant has expressed a willingness to sell the product

At time T there is literally no person in the market who wants to sell below the ask, so all the people who are waiting to buy at the bid (or below) could very well be waiting there forever. There's simply no guarantee that any seller will ever want to part with their product for a lesser price than they think it's worth.

So if you want to buy the product at time T you have a tough choice to make:

  • you get in line at the bid price, where there's no guarantee that your request will ever be filled, and you might never get your hands on the product

  • you decide that owning the product right now is more valuable to you than (ask - bid) * quantity, so you tell the exchange that you're willing to buy at the ask price, and the exchange matches you with whichever seller is first in line

Now, if you're in the market for the long term, the above choice is completely immaterial to you. Who cares if you pay $10.00 * 1000 shares or $10.01 * 1000 shares when you plan to sell 30 years from now at $200 (or $200.01)?

But if you're a day trader or anyone else with a very short time horizon, then this choice is extremely important:

  • if the price is about to go up several cents and you got in line at the bid (and never got filled) then you missed out on some profit

  • if you "cross the spread" to buy at the ask and then the price doesn't go up (or worse, goes down), you're screwed. In order to get out of the position you'll have to cross the spread again and sell at at most the bid, meaning you've now paid the spread twice (plus transaction fees and regulatory fees) for nothing.

(All of the above also applies in reverse for selling at the ask versus selling at the bid, but most people like to learn in terms of buying rather than selling.)

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Honestly, I wonder if the other answerers aren't overthinking it. Their answers are detailed and correct, but what your coach may be saying is this:

When you have bought a stock, on cash or margin, and you are watching it rise you are evaluating when you sell on the price of the stock you are seeing. In reality, you should look at the bid (price buyers will give you for the stock) and ask (price sellers will charge you for the stock) prices. If the stock is going up, odds are the price of the stock is very close to the ask price because it is purchases that are driving it up, but that's not what you're going to get when you sell. You're going to get something around the bid price. If the spread between the two is large (i.e. a volatile stock) this could be many cents or more lower than the ask price.

Therefore, what your coach may mean by "Selling on Ask" is you're using the stock price when it's equal or close to the ask price to decide when to sell, instead of letting the stock peak and drop (when its price will approach the bid price) or letting the trailing bid offers catch up to your desired sell point and selling then (i.e. letting the stock point grow PAST your sell point, dragging the bid price up with it).

Just a thought, but that sounds like a term a coach would come up with to mean selling and getting less than you thought you were going to from the sale.

(I know it's a necro reply, but the Interwebs are immortal and people come via Google... I did)

  • This is almost the reverse of what sell on the ask (and buy on the bid) mean. Sell on the ask means that you are asking for a higher price than the market is offering. I.e. you are leading the market, not trailing. You set a price that you want to get rather than taking the market price. – Brythan May 27 '17 at 18:57

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