Ask price

Every tradable instrument carries two prices at once. The bid is where the market is willing to buy, the ask, also called the offer, is where it is willing to sell, and the ask is always the higher of the two. An instruction to buy is filled at the ask and an instruction to sell is filled at the bid. The distance between them is the spread, and it is the first cost any position meets.

Where the ask comes from depends on the market. On a central order book it is simply the lowest sell order currently resting, so it changes when that order is filled or withdrawn. In an over the counter market it is quoted by a dealer or aggregated from several liquidity providers, and several different asks exist simultaneously at different institutions with none of them wrong. In both cases the displayed ask is good for a stated quantity only: an order larger than the size resting at that level reaches into the next one, and the average price paid is worse than the price displayed.

The consequence readers meet first is that a position opened at the ask is immediately valued at the bid, so it shows the spread as an unrealised debit before the market has moved at all. That is arithmetic rather than a charge, and it reverses only when the price covers the distance. The second is that a quoted typical spread is an average across a session and not a floor: asks widen around scheduled data releases and at the boundaries between sessions, which is when the difference between an average and a floor matters most.