Share Prices - The Terminology Of Quotes
Share trading has quickly become one of the world's most favorite past times...
Thus, there is a reasonable chance you've been convinced (or will be) to get on the bandwagon yourself at some point. If you intend on share trading, the main factor is to realise that there is quite a learning curve and a lot of aspects to learn and consider.
Setting up your account, choosing your broker, your trading platform and how much you are willing to invest are just some. One of the most daunting components in share trading for the newbie are the various terms attached to share prices and how to calculate them.
There are primarily three types of share prices to account for when share trading. The first is the bid price. This is concerned with the purchase of securities. The bid price is simply the amount a buyer is willing to pay for a security. The offer price is the other side of the coin. This is the amount that a seller is willing to sell a security for. The mid-price is the average or middle value of the two aforementioned share prices (as the name suggests). The market maker (the person who decides on the bid price and offer price) basically decides on a price based on the offer made by the public. Another useful metric is the spread. The spread is the difference between the bid price and the ask price.
As you diversify your investments into other trading methods such as forex trading, spread betting and CFD trading, you will encounter more vital metrics which may confuse you due to the similarity in the terms. Thus, make sure you grasp the different share prices early on and be proficient to make your learning curve less of a hassle.
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