Hit The Bid

Is it a fresh dance move? The latest Ariana Grande chart-topper? A new athletic take on the silent auction?

Close. It’s what happens in the trading world when a seller agrees to sell at a price offered by another broker.

Let’s say we’ve got 100 shares of a security that we’re looking to sell at $41 per share. Our broker lets the rest of the investment world know, and before too long, another broker contacts us with an offer: she’s willing to pay $38 per share, but not a penny more. “Nah,” we say, since we know the shares are worth more than that.

A little while later, our broker receives a bid for $39, a bid for $40, and a bid for $39.27. Since $40 seems to be the best deal we’re going to get, our seller hits the bid, which means he agrees to sell for $40 per share.

The goal here is to get the best price for the seller—that’s us—even if it ends up being less than our initial asking price.