Track 1 · Lesson 2 · 5 min
Bids, asks and why prices move
The order book behind every price. Place trades in a live book and watch the price move.
Every stock exchange keeps an order book: a list of buyers waiting at the prices they will pay (bids) and sellers waiting at the prices they will accept (asks). The gap between the best bid and the best ask is the spread. A trade happens when someone accepts a price on the other side.
Try it
Move a price yourself
A simplified book. Real ones change thousands of times a second.
Buying pushes prices up because a market buy takes the cheapest sellers first; once they're gone, the next seller wants more. Selling does the opposite. News moves prices even faster: everyone changes their bids and asks at once, so the price can gap before many shares trade.
Checkpoint
The best ask is $50.02 with 200 shares, the next is $50.04 with 500. You buy 400 at market. What happens?
A market order works through the book: 200 at the best ask, then the rest at the next price up.
Market or limit? A market order fills now at whatever the book offers. A limit order names your worst price and waits. Limits protect you in thinly traded stocks, where the spread can be wide; that's why Be The Puck's backtests assume each trade in a micro cap costs 0.30%, against 0.05% for a big stock.
Volume is how many shares changed hands. Big moves on heavy volume mean many people acted on new information; the volume lesson covers plays built on it.
Why plays read only the close. Prices swing all day. The closing price is the one everybody agrees on, it sets the next day's starting point, and it is what most published rules use. A dip below a level at noon that recovers by 4pm doesn't count.
Check yourself