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
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lot hope this was helpful to you and
i'll talk to you soon