Stocks & options: Get the best price! Bid and ask price explained. / Stock market trading basics 101

Stocks & options: Get the best price! Bid and ask price explained. / Stock market trading basics 101


Stocks & options: Get the best price! Bid and ask price explained. Bid vs ask price, bid and ask spread, bid and ask explained, bid price and ask price, stock market trading basics 101, what is bid price, what is ask price, what is bid and ask price, buying stocks, buying stocks for beginners, buying stocks for dummies, buying stocks 101, buying stocks online, how to buy stocks, how to buy stocks for beginners, buying stock options, buying call options, buying put options, stock market trading tips this is David Moadel thank you looking at welcome to looking at the markets with David Moadel today i wanted to talk about how to get the best price when you’re buying or selling or short selling or whatever it is you’re doing with stocks or options so let’s take a look at that right now I’ve got my broker’s platform pulled up and i’m going to look at options but this applies to stocks just as well as options alright so let’s say wanted to purchase a starbucks january twenty fifty seven and a half put option ok so let’s look at the bid and the ask price now just for review if you’re trying to buy like right now I would be buying a starbucks put the ask price is what somebody is willing to sell it to you for right now so if you were willing to buy it at the ask price you you would get your order executed or filled pretty much immediately but that’s not a good price you can actually do better than that the bid price is the price let’s say you were trying to sell starbucks put option well right now you could sell it to somebody for for for dollars 95 cents a share that’s the bid price that’s what somebody is willing to pay for it right now with no haggling no questions asked no negotiating necessary alright so but again that that’s that’s not a good price you can do better than that so the bid and ask prices are what you can buy and sell for you know whatever it is you want to buy or sell you can get those prices right now with no haggling are negotiating involved but you’re really allowing yourself to be ripped off a little bit or taking advantage of so I want you to learn how to haggle how to i called hacking and how to negotiate the best possible price so first of all forget market orders if you’re going to haggle because the market order is is just accepting the bid price or the ask price the bid price if if you’re trying to sell something or the ask price you trying to buy something you just saying okay market take my money take as much money as you think is appropriate take whatever amount you think is right well that’s that’s not that’s no way to negotiate really you know and you’ve got your limit orders you stop quote your stop quote limit today I’m going to keep it simple rather than going to the differences between all these will just talk about limit orders that’s really the simplest way to do it a limit order says this is my price and i will not go below or above it depending on if you’re buying or selling alright so let’s say you wanted to buy a starbucks put option right now well if if you put a limit order of let’s say five dollars and I don’t know five dollars and three cents ok that limit order is saying that’s the most I’m willing to pay for it i’ll pay five dollars in three cents a share or less but i’m not going above that and that’s that’s you know what you have to have boundaries in life when you get when you negotiate when you haggle alright so that’s your that’s your limit all right now and on the other hand if you’re going to cell if you’re going to sell something then the limit order would be yet you you would require that the the purchaser pay you at least that amount or more but not less ok so that’s what a limit order means and so how do you choose the number for the limit order well what I do is I find the the average or mid middle price between the two and you can calculate that with a calculator pretty easily just add up the two numbers in this case for 95 plus 5 10 equals and then / to get the average we’re going to round up to five dollars in three cents and then add a penny or two because it’s it you might get the exact middle probably not though you’ll probably have to go a penny or two higher at least so let’s say 5503 let’s add one to that let’s say 50 for ok and then you would you would put in your order and give it about a minute or two to see if you get filled if two minutes go by and your order is not filled or executed then go back change it at a penny just add one penny a time try 505 if that doesn’t get filled maybe try 506 but at this point you have to ask yourself how badly do you want to buy or sell this stocker option you know people because it if you keep going back ok let me try 50 7508 then you’re getting really close to the ask price or or if you’re selling your getting really then you’re going down down down and and you’re you’re asking for the bid price because it if you were right now we’re talking about buying and so you you go a little bit above the middle average price but if you were selling you calculate the middle or average and then go a penny or two below that you know a little closer to the bid so but if you if you find yourself haggling haggling and keep adding to it and getting closer to the ask price or subtracting and he getting closer to the bid price you might want to ask yourself how badly do I want to make this transaction because if you’re getting the 508 for example now it’s 509 it looked close you are to the ask price at this point is it even worth it maybe you’re better off just waiting ok unless you’re desperate to sell or buy something which you really hopefully you’ll you’ll never be in that kind of desperate position because desperation causes us to make poor decisions alright so forget market orders if you’re going to haggle if you’re gonna get the best possible price in most situations i’d go with a limit order that’s that’s really where you’re expressing your boundaries this is you know what I will and will not will not accept calculate the middle and then go a penny two a penny or two oh you know closer to the better ask depending on what you’re doing buying or selling and if that doesn’t fill in a minute or two add a penny keep adding a penny keep changing and changing it until you’ve reached either either the transaction goes through or you’ve just gone too far out and your you don’t even want to make the transaction anymore so that’s a quick primer on how to get the best price when you’re buying or selling and if you’d like more assistance with this or with stocks options putting together trading plan or finance in general please contact me anytime you can email me at David Modell @ gmail.com and if you haven’t subscribed to my channel yet please subscribe to my youtube my youtube channel so you can receive the latest updates on my financial educational videos also if you like this video please give it a thumbs up on YouTube and leave a comment so i’ll know what kinds of things that you like to see in my finance videos and what you’re looking for in future videos thanks a lot hope this was helpful to you and i’ll talk to you soon

3 Comments

  • Oke Uwechue

    May 20, 2018

    Another potential issue involved in haggling for the best price for the option contract is the TIME factor.
    The Bid/Ask price windows are dynamic, so we must be aware of this.
    For example, if the Bid/Ask price window is slowly moving UPWARDS, then a haggling Buyer may find that after 30 minutes of such haggling, they may be FORCED to buy at a higher price than they were prepared to pay simply because of the upward movement of the Bid/Ask window has made the lower prices unavailable.
    Similarly, a haggling Seller may be FORCED to sell at a lower price than he/she was prepared to sell if the Bid/Ask window is shifting DOWNWARDS over time, as it simply makes the previously-available high prices unavailable.

    A trader must be able to execute quickly and decisively after his/her market analysis.

    Reply
  • EqualLandFreePeople

    November 26, 2018

    With all the junk youtube videos this is good yet has less than 1000 views.

    Reply
  • Kureo Mado

    October 7, 2019

    David, I love that intro!!! It is just so surreal!!! 😀

    Reply

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