Best Offer in Stock
In stock transactions, we will be treated to stock quote info before making a stock transaction. Stock quote info is a page that contains price information about the stocks we are going to buy. This information includes the highest price, lowest price, closing price, opening price, previous day’s closing price, today’s average price, issuer code and name, percentage change in price, current stock price and the bid and offer columns.
So, what exactly is a bid and offer? How important are bids and offers? And why is there a separate column to show bid and offer information?
What are bids and offers?
Bid and offer can be understood as bid and ask prices. The demand represents the people buying the stock and the supply represents the people selling. This means that the bid price is the purchase price and the price can be said to be the selling price.
Each bid and offer price is actually not the actual price of a stock. Prices shown as bid and offer prices are the result of a mark-up that has been made by the broker or brokers as a business advantage for them. Even so, the mark-up made by the broker usually does not significantly affect the stock price. So, it will not greatly affect the transactions of market participants.
The bid and offer columns on stocks are columns that contain queues to buy and sell by market participants. This column usually provides information at what price people want to buy and sell shares, how many queues of buying and selling transactions are at a certain price level and how much volume of buying and selling transactions is at a certain price level.
The information in the bid and offer columns is updated in real time, so it is possible to change over time. So we actually can’t use bid and offer data to predict market price movements. However, we can still see market sentiment directly through this information.
In addition, the queues in the bid and offer columns are basically unexecuted or not finalized. So, when a transaction enters the bid and offer column, the transaction cannot affect market sentiment. Because according to the rules of the exchange, transaction settlement takes 2 days from the time the transaction is inputted. And it’s not certain that every transaction that enters the bid and offer line gets the shares at the exact price they want.
Bid and Offer Functions
The bid and offer prices serve as price information when market participants want to buy or sell shares. The bid price is the price that market participants get when they buy, while the offer price is the price that investors get when they sell.
Meanwhile, the columns that contain bid and offer information are queued transaction data inputted by market participants. The transactions are still not executed and are still in the queue. So, even though the trend in the bid and offer columns shows the large volume in the queue for buying transactions. The price of shares on the market will not be directly affected, because basically the transactions in the bid and offer columns have not yet entered the market.
Even so, the information in the bid and offer column is important information, which can show investors real-time market sentiment. While market sentiment itself is a factor that determines where stock prices will move. It’s just that, the main problem is that the queue for bids and offers changes every time, so that market sentiment shown through bids and offers can also change.
Stock Best Offer
Best offer of shares is the best offer price available at the time the transaction is executed. Previously, we knew that every purchase and sale transaction made by market participants would enter the bid and offer queue.
Well, because it’s still in the form of a queue, these transactions haven’t really been executed yet. Rather, it is necessary to wait for the completion time of T+2. In other words, new transactions actually enter the market after 2 days since market participants buy or sell.
By the time the deals in the bid and offer queues are actually executed, not all deals will get the price they want. Because in buying shares, there must be shares that are being sold at the same time. And the selling price must be the same as the price of the shares to be purchased. So, when buyers and sellers want different buying and selling prices, the system will provide a middle price for both of them. Thus, the buyer will get a slightly expensive purchase price, and the seller will receive a slightly lower selling price than the previously expected price.
This mechanism is carried out because stock transactions do not have a liquidity provider like the forex market. In addition, shares issued by issuers and sold on the stock exchange are also limited. Not 100% of an issuer’s shares are sold to the public. Although there are also issuers that sell almost all of their shares to public investors, they are usually quite rare. So, the number of shares traded on the exchange is limited, so there are times when shares are not available for purchase unless an investor sells them.
What are the advantages of selling shares at the best offer price?
For the seller, the best offer is the best share offering price that he can get from the trade at that time, if he wants the sell order to be executed quickly. Indeed, he could have submitted a higher bid price than the best offer, but the consequence is that the sell order is likely to take a long time to be executed. Because, buyers will certainly prioritize buying at the lowest price.
What are the advantages of buying shares at the best offer price?
The best offer is the best price created from an ongoing trade. Investors who are targeting certain stocks that are considered good and want to own them immediately can submit a buy order at the best offer price. By using the best offer price, the purchase order will be executed immediately. What if he enters a buy order at a lower price than the best offer ? can be. However, there is a possibility that it will take a long time to be executed. Except that right after he entered the buy order, the share offering price continued to fall.
