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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Best Bid

Definition:

If you were to peek over a professional trader's shoulder to look at their computer screen, you'd see a line with numbers above and below the line. These are buy and sell offers. When the trader gets a message from a client, he or she has to look at all those numbers and find the "best bid" or best price for that client.

Example

A client wants to buy a million shares of GOOG on a "best execution" basis. The trader looks at the offers to sell GOOG which are all over the place: $582.34, $582.12, $582.23, etc. He is obligated to take the best price for his client (the cheapest price). But sometimes the cheapest price is only good for 100 shares. In that case, the trader takes the smaller chunks in pieces starting from best bid until he can fulfill the million-share order.