Best Bid & Ask

Definition

The Best Bid & Ask represents the highest available buy price (Best Bid) and the lowest available sell price (Best Ask) in the order book at any given moment. These two prices form the immediate liquidity boundary where buy and sell orders are most likely to be executed.

Key Concepts:

• Best Bid: The highest price a buyer is willing to pay for an asset.

• Best Ask: The lowest price a seller is willing to accept for an asset.

Visualization:

• Best Bid Line: Displays the price level of the highest buy order over time.

• Best Ask Line: Displays the price level of the lowest sell order over time.

Key Insights:

• Price Boundaries: The gap between these two lines forms the Bid-Ask Spread, indicating the cost of immediate execution.

• Liquidity Dynamics: Changes in the best bid and ask prices reflect shifting supply and demand.

• Market Sentiment: Persistent upward movement in the Best Bid suggests buying pressure, while downward movement in the Best Ask suggests selling pressure.

The Best Bid & Ask lines provide a real-time snapshot of market liquidity boundaries, helping traders track price discovery, assess market efficiency, and identify immediate buying and selling pressures.